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WESTERN SANCTIONS

Oman sees big delay in Iran gas pipe project

Muscat, September 11, 2013

Iran and Oman are unlikely to even start laying a planned subsea gas link for at least another two years, Oman's energy minister Mohammed bin Hamad Al Rumhy said on Wednesday.
 
After the two energy ministers signed an agreement to build a pipeline from Iran to Oman at the end of August, Iranian media quoted Iran's oil minister saying gas would start flowing through it in under two years.
 
Such a rapid roll out of a subsea pipeline would challenge many developers. Iran's progress in more modest projects has been severely slowed by tight Western sanctions, making the 2015 flow claims look optimistic.
 
But Muscat hopes the new Iranian government's relations with the West will improve sufficiently enough, in the long preparation stage that the project will need, for it to go ahead in the latter half of the decade without angering Washington.
 
"I think it's going to take a long time... I would think (the project starts) two years from now, three years from now," Al Rumhy said on the sidelines of an energy ministers' meeting in Korea. "By then, Iran will be back to normal."
 
He said that even if Oman decided to build its own internal pipeline it would normally take two years before digging begins. Laying a pipeline across the Strait of Hormuz, one of the world's busiest shipping lanes, at a time when Iran's relationship with most of its Gulf neighbours remains tense, is likely to take longer.
 
Oman has been agreeing to buy gas from Iran as far back as 2005 but the two sides have never finalised terms, while Oman has come under US pressure to source fuel from alternative suppliers such as Qatar, according to US embassy cables released by Wikileaks.
 
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.
 
US ally Oman's enthusiasm for building the pipeline may also depend on whether it can agree terms for BP to develop the Kazzan tight gas project, which could supply around 1 billion cubic feet per day of gas to Omani industry by 2018.-Reuters



Tags: Oman | Iran | gas | Delay |

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