INTERVIEW: Oman wants to extend gas pipeline network to Iran and Yemen: minister

 Oman would like revive plans to import Iranian gas via pipeline should the nuclear deal be reinstated, and is also considering extending its pipeline network to Yemen, Mohammed al-Rumhy, the sultanate’s oil and gas minister told S&P Global Platts.

“I am optimistic that, if not the later part of this year, maybe soon we will be talking about bringing life to that project again,” Rumhy said of the Iran-Oman pipeline, in an interview. “There are many opportunities to make good use of that project from Oman’s point of view.”

In 2016, senior officials from state-owned National Iranian Gas Exports Co. met with Oman’s oil ministry and three international oil companies — Shell, Total and Korea Gas Corp — to explore the potential to pipe gas from Iran to Oman.

This followed a 2013 agreement by the two nations to develop a 15-year gas exports plan via a seabed pipeline. The pipeline proposed at the time would have had the capacity to transport 1 Bcf/d of Iranian natural gas to Oman.

Those plans were abandoned when former US President Donald Trump withdrew the US from the Joint Comprehensive Plan of Action, also known as the Iran nuclear deal, in May 2018, reinstating sanctions against the Middle East nation.

But with the US now under President Joe Biden, the two sides have begun indirect talks in Vienna with the aim of reinstating the deal.

Rumhy said he is closely monitoring the talks but wants to be sure that if the JCPOA comes back into force, it is lasting and not subject to future political wrangling.

“We could do with more gas, if the supply is steady, guaranteed, [with] no threats from future sanctions,” said Rumhy. “The first question people ask is what if, after Biden, Trump comes back and cancels the agreement again? This question will be asked, and we have to be careful on what type of agreement we have this time around.”

Oman consumed 775 Bcf/d of natural gas in 2017, according to the US Energy Information Administration, and the country been in surplus since September 2017, when the BP-operated Khazzan gas field came online and swiftly ramped up production to 1 Bcf/d.

Helping Yemen

The proposed pipeline would run from the giant South Pars gas field in Iran to Sohar in the north of Oman, where an existing pipeline runs to Salalah near the Yemeni border.

Ideally, the pipeline could then be extended into Yemen, Rumhy said.

“Yemen, one day, will have peace,” said Rumhy. “They day they sign a peace agreement the first thing they will ask for is energy. Gas is needed in a country like Yemen to start to move from conflict to creating industries and opportunities for their people.”

Those opportunities could be an increase in industry, said Rumhy.

At present, there is little demand for gas in Yemen, the Arabian world’s poorest country, due to its patchy infrastructure and devastation wrought by a seven-year-long civil war. Natural gas consumption today is around 10-11% of 2014 highs, which saw demand reach 0.15 Bcf/d, according to S&P Global Platts Analytics.

“There is a question over what extra demand is there to unlock in Yemen as lots of gas demand is latent since penetration in power generation and bunkering is low,” said Mark Mozur, lead analyst for demand modeling at Platts Analytics. “In theory a pipeline could unlock additional demand in both of these sectors. But to unlock demand in buildings you would need city gas distribution infrastructure that does not currently exist.”

LNG, hydrogen plans

In addition to re-exporting Iranian gas to Yemen, Oman would look to utilize some for industry, increase its LNG and petrochemical production capacity, and also potentially delve into the hydrogen space, Rumhy said.

Oman has recently been able to catalyze its LNG exports through the development of the Khazzan field, one of the few examples of successful employment of US-honed shale drilling techniques in the Middle East.

Omani LNG exports were essentially at full capacity 2018-2020, when they averaged at about 12 Bcm/year. Over the last 24 months, Oman has been conducting debottlenecking operations at its Oman LNG facility, which will allow Omani LNG exports to expand by about 2 Bcm/year. Platts Analytics expects Omani LNG exports at around 14 Bcm/year over the coming five years.

“We could do LNG very fast. Today, it is feasible to use gas to produce blue hydrogen. That is something we would discuss with the Iranians,” said Rumhy. “This would open up a new opportunity for the Iranians to get their hands on hydrogen as well. We can do things like that together.”



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