Oman Said to Consider LNG Imports as Domestic Gas Use Surges

  • Demand for electricity drives nation's natural gas consumption
  • Spare capacity to liquefy gas for export reaches 9-year high

Oman may start importing liquefied natural gas to meet surging domestic energy demand, according to two people with knowledge of the matter, a shift in trade that would make it the fourth Arab country in the oil-rich Persian Gulf to buy LNG.

Oman currently exports liquefied gas under long-term contracts to Spain and several Asian countries including Japan and South Korea. It’s now studying options to import LNG as well, to help generate power and for other uses, said the two people, who asked not to be identified because the plan isn’t public. Potential imports would arrive at the port of Sohar north of the capital city Muscat. Oman’s Ministry of Oil and Gas wasn’t able to immediately respond to a call for comment on Monday.

LNG trade is expanding in the Middle East due to the growing regional use of electricity and the lack of cross-border pipelines for transporting natural gas. Combined imports of LNG by Kuwait and the United Arab Emirates increased 47 percent in 2014 from the previous year, according to the International Group of Liquefied Natural Gas Importers. Bahrain is building a receiving terminal for the fuel, while Jordan, Egypt, Morocco and Pakistan also plan to buy LNG.

Oman’s possible shift to importing the fuel follows years of rising local gas consumption and shrinking exports of LNG. Spare production capacity at Oman LNG LLC, which operates the country’s facilities for liquefying gas for export, last year reached its highest level since 2006, according to the company’s annual reports. Oman produced 7.95 million tons of the fuel in 2014 from plants with an annual capacity of 10.4 million metric tons, Oman LNG said in its latest annual report. Natural gas consumption in Oman jumped to 774 billion cubic feet in 2013 from 520 billion cubic feet in 2009, according to the U.S. Energy Information Administration.

LNG imports would supplement Oman’s current supply of natural gas by pipeline from Qatar. Oman also hopes to receive gas from Iran through a separate pipeline that has yet to be built. Oman and Iran are discussing a route for this link, Mohammed Al-Rumhy, Oman’s oil minister, said on April 14, though the two countries still haven’t agreed on a price for the Iranian gas.

Buyers of LNG have benefited from a 50 percent drop in prices since the beginning of the year. Prices will be under pressure “in the coming weeks” because of new LNG supplies from Australia and the U.S., and lower demand from Japan as it restarts its nuclear reactors, Bank of America Corp. said in an Aug. 24 report.

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