OMAN: LNG exports generate $4bn in annual revenues

Wed, 13 March 2013

By Conrad Prabhu — 1,500 cargoes of Omani LNG delivered to date — MUSCAT — Exports of Omani liquefied natural gas (LNG) presently generate around $4 billion in annual revenues for the country, underscoring the important contribution that the LNG complex at Qalhat in Sur continues to make to the national economy, according to the CEO of Oman LNG. Harib al Kitani said the three-train liquefaction complex has already chalked up an impressive 1,500 LNG deliveries since exports first began in the year 2000. Markets served thus far have included key customers in Asia, the Pacific Rim and Europe, the official stated in a recent presentation on the company’s performance.

“Today, we have exported 1,500 LNG cargoes. This is a great achievement for the Oman LNG and Qalhat LNG complex. In a sense, we are ambassadors for Oman because we deal with the market out there. We sell LNG cargo on a long-term basis, and our performance here in Oman reflects the reliability of the country as a supplier of LNG,” Al Kitani stated. In his presentation, Al Kitani sought to dispel the notion that Omani LNG was being sold in international markets for cheap. On the contrary, LNG from the Sultanate was “one of the highest priced” LNG cargoes exported to Japan and Korea, which presently account for the lion’s share of LNG deliveries from Oman. “Both markets get their LNG from Oman at remarkably high prices. It is not true that Omani LNG is being sold for cheap,” the CEO stressed.

Underlining the contribution made by Oman LNG to the national economy, Al Kitani noted that the Omani government, as the majority shareholder in the project and the owner of the feedgas, continues to receive a sizeable chunk of the estimated $4 billion in revenues earned from LNG exports every year. Other benefits accruing to the government from this project come in the form of taxes on corporate income, as well as investments by Oman LNG in social projects, he said. Oman LNG’s continuing success on the world LNG stage, the CEO said, is also partly attributable to the country’s geographical location in the middle of the two major consuming markets.
“We are fortunate because we are located in the centre of these two big LNG markets — in the Far-East and the Atlantic Basin (United States and Europe), and we sometimes use this geographical advantage to arbitrage our cargoes depending upon where the dollar prices are the highest. Cargo swaps also represents a major business opportunity for Qalhat LNG, because their output is not tied up (in long-term commitments) as much as Oman LNG.”
At the same time, he warned that the emergence of new players and shifting market trends have altered the dynamics governing the international LNG trade. “The market is changing — it’s getting crowded. The LNG industry was once a very small club with a few buyers and few sellers. Today, everybody wants LNG and wants to build LNG plants. Thus, we have new suppliers as in Yemen, and other places, and we also have a lot of new buyers, for example, China, India and so on. What also comes as a surprise is that markets like Kuwait and Dubai are importing LNG. In fact, we have supplied a number of cargoes to Kuwait from Qalhat LNG. So even in this (energy rich) region, there are countries that have installed LNG terminals for the sake of security of supply.”
Commenting on Oman LNG’s Social Investment Programme, he said the company has so far invested in the order of RO 30 million on some 290 social schemes over the last 13-plus years. Not included is Sur General Hospital which Oman LNG helped finance at a cost of $40 million. Last year alone, the company earmarked around $27 million towards some 30 social investment schemes.
Al Kitani also listed two strategic initiatives for the future. The first involves the planned integration of Oman LNG with its sister liquefaction company, Qalhat LNG. Both companies are currently in the final stages of determining the high level structure of the integrated company. Integration of all activities is expected to be completed by the second half of this year.