Oman signs MoU to import Iranian gas
Dubai, August 27, 2013
Iran has signed a memorandum of understanding (MoU) to export gas to Oman from 2015, in a 25-year deal valued at around $60 billion, Iran's energy ministry news service said on Tuesday.
Energy-hungry Oman agreed to buy gas from Iran as far back as 2005 and a later draft deal in 2007 included plans for Oman to process Iranian gas for export as liquefied natural gas (LNG).
But the two sides have never finalised terms and Oman has been pressured by the United States to source fuel from alternative suppliers such as Qatar, according to U.S. embassy cables released by Wikileaks.
Oman, which has warmer relations with Iran than other Arabian Peninsula countries, began importing Qatari gas in 2007, but its demand has risen rapidly since, threatening its LNG exports and pushing Muscat back to the negotiating table with Tehran.
The latest MoU signed by new Iranian energy minister Bijan Zanganeh and his Omani counterpart Mohammed bin Hamad Al Rumhy, includes an agreement to start laying a gas pipeline to Oman as soon as possible, oil ministry news service Shana reported.
"We can start implementation of the project; mainly because top executives of the two countries insist that the project should be implemented as soon as possible," Shana quoted Zanganeh as saying after the signing ceremony held on Monday during a visit to Tehran by Oman ruler Sultan Qaboos.
Iran sits on the world's largest gas reserves, according to the latest statistics compiled by BP, but it has been prevented from exporting much of it because of western sanctions that have slammed the brakes on its LNG export ambitions.
Oman has plants able to produce up to 10.4 million tonnes of LNG a year but has not produced more than 8.8 million in the last five years and output fell to 8.4 million in 2012, according to Oman LNG's latest annual report.
According to a working copy of the 2007 agreement between the two countries, in addition to imports of 1 billion cubic feet per day (bcfd) of gas from Iran for domestic use, Oman would allocate 2 million metric tons per year in excess capacity at its Oman LNG plant to process Iranian gas for export. The copy of that agreement was obtained by the U.S. embassy in Muscat according to 2007 cable leaked to Wikileaks.
It is very unlikely that the big European shareholders -- Shell and Total -- would agree to liquefy Iranian gas while EU sanctions on Iran are in place, but Iranian gas imported for domestic use could free up more Omani fuel to feed Oman's existing LNG export facilities.
In addition to sanctions pressure, U.S. ally Oman's enthusiasm for building the pipeline with Iran may depend on whether it can agree terms for BP to develop the Kazzan tight gas project, which could supply around 1 billion cu ft per day by 2018. – Reuters
More Energy, Oil & Gas Stories
- ME oil, gas transaction value up 15pc
- Victrex to showcase new product in Paris
- Aramco JV puts off giant refinery overhaul to 2015
- Libya threatens to bomb N Korean tanker
- Bahrain 'producing 850MW of surplus power'
- 2,000 experts for Bahrain geosciences summit
- Libyan rebels start oil exports, bypassing govt
- Dubai drilling company set for London IPO
- Opec output soars on higher Iraq exports
- S Korea to pay Iran $550m under nuke deal
- Qatar LPG exports will stay unchanged till 2018
- $14bn Bahrain energy sector focus for summit
- Iraq now world's fastest-growing oil exporter
- Old IT systems pose risk to oil firms
- Thomson Reuters adds commodity monitoring tool
- Oil below $90 to hit GCC economies
- GlassPoint appoints new Oman director
- Sheffield company opens Dubai hub
- Oman targets big rise in gas output
- Intertek buys UAE firm for $66m
- Qaiwan to tender Baizan refinery EPC contract
- Al Maha wins Oman Air fuel supply deal
- Iran to become top gas importer by 2025
- UAE hydrocarbon projects seen hitting $11bn
- Summit focus on occupational safety
- Aramco names new senior VP
- Siemens gets $253m Qatar power contract
- Taqa-led group's India deal worth $1.6bn
- Taqa-led group to buy India power plants
- Iraq oil exports hit record 2.8m bpd