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Энергетика Омана

Топливно-энергетические ресурсы Омана

Энергетика (Oman’s Energy)

Crude Reserves

Oman is the largest non-Organisation of Petroleum Exporting Countries (OPEC) oil producer in the Middle East. According to Nasser bin Khamis Al Jashmi, former undersecretary of the MoG, Oman held an estimated 50bn barrels of total oil reserves as of August 2013, while BP’s 2014 Statistical Review of World Energy reported that Oman held 5.5bn barrels of proved reserves, representing the seventh-largest reserves in the Middle East, and 23rd-largest worldwide. The majority of oil production is extracted from the Oman Basin, with PDO’s Block 6 comprising 70% of total production. The Yibal, Al Ghubar, Qarn Alam, Marmal and Harweel fields represent the mainstay of Oman’s oil production, although they began to decline in the early 2000s. Yibal, for example, began production in 1968, reaching peak production of 250,000 barrels per day (bpd) during the late 1990s, before declining to 80,000 bpd by 2003. PDO has since drilled 500 horizontal wells and introduced EOR to the field, which is expected to boost recovery rates to 55%, from 42% in 2004. Oman has two offshore producing fields adjacent to the Musandam peninsula, Bukha and West Bukha, which are operated by RAK Petroleum and DNO Oman. The Bukha field has produced since 1994, and the West Bukha field began production in 2008.

New discoveries have helped bolster supply. According to an August 2014 article in Oil Review Middle East, as many as 16 local and international companies are currently exploring for hydrocarbons under production sharing agreements signed with the MoG. New exploration has been driven in large part by PDO, which in 2009 discovered an estimated 1bn barrels of crude reserves in the Al Ghubar South field, located near the Al Ghubar and Qarn Alam fields. Local media reported in 2009 that the Al Ghubar South field represents one of Oman’s most significant oil discoveries ever made. In 2009 PDO also discovered new reserves at Malaan West, and Taliah in the north-western cluster of Lekhwair, part of the Upper Shuaiba geological formation, which contains many of PDO’s main reservoirs.

The South Oman Salt Basin could hold significant resources as well. A 2012 report published by the US Geological Survey found that undiscovered reserves in the basin totalled 370m barrels of oil and 315bn cu feet of natural gas, as well as over 40m barrels of NGL.

In October 2013 PDO announced plans to invest $11bn in 16 new projects over the next 10 years, which will add an estimated 1bn barrels of oil to the sultanate’s total reserves, and in August 2014, the Omani government asked PDO to boost its production to 600,000 bpd in 2015, following nine months of successful expansion in which the company increased production from a plateau of 500,000-550,000 bpd to 570,000 bpd. The company’s production maintenance and expansion is supported by three distinct pillars: exploration, well, reservoir and facility management (WRFM), and EOR activities. As Raoul Restucci, managing director of PDO, explained to OBG, “Over the last few years we’ve been very successful on the exploration front, adding more and more barrels every year. WRFM enables us to make the most of what we have, and entails a work programme of around 15,000 well interventions to optimise existing production. This is an area where PDO has been recognised as a global leader; decline rates at mature fields averaged in excess of 20% per annum 10 years ago, and today are down to 8-9%, with some fields as low as 1-2%, thanks to continuous restoration and optimisation. For our third pillar, the vast majority of our EOR activities have been exceeding expectations, often enhancing production beyond initial primary or secondary recovery phases. The Marmul field, for example, has increased production more in the past few years than during the previous 30, thanks to the successful polymer EOR and WRFM well-by-well and sector-by-sector optimisation.”

Нефтеперерабатывающая промышленность

Энергетика (Oman’s Energy)

In 2013 ORPIC processed 56m barrels of Oman’s export blend, or 17% of total production, while the remainder was exported. Mina Al Fahal recorded a an increase in crude processing, which reached 36.4m barrels, compared to 30.8m barrels in 2012, while Sohar’s production declined to 19.4m barrels from 27.7m barrels in 2012 due to a planned shutdown.

Oman’s downstream segment is in the midst of a strong expansionary period, as the sultanate moves forward on billions in new refinery upgrade and construction projects, and the development of new petrochemical facilities. There are two operating refineries: Mina Al Fahal, in Muscat, with annual refining capacity of 106,000 bpd, and the Sohar Refinery, which offers a capacity of 116,000 bpd, although Sohar’s expansion will see its refining capacity rise to nearly 200,000 bpd.

As part of its plans to boost downstream capacity and enhance the oil sector’s value chain, ORPIC announced in March 2014 that it has invested $7bn in new downstream projects, including the Liwa Plastics Project (see Industry chapter), the Sohar Refinery Improvement Project (SRIP) and the Muscat-Sohar Product Pipeline. Plans are also under way to construct a new 230,000-bpd refinery at the fast-growing Port of Duqm. The Sohar Refinery Improvement Project (SRIP) and Duqm Refinery and Petrochemicals Complex represent billions of dollars in new investments, and significant growth channels for a host of stakeholders, from industrial producers and construction contractors to residents in the refinery’s surrounding cities.

The Sohar Refinery Improvement Project (SRIP)

Work on the SRIP has progressed steadily since November 2013, when a JV between South Korea’s Daelim Industrial Company and UK-based Petrofac, was awarded a $2.1bn EPC contract for the project. In September 2014, OPRIC announced construction work for the SRIP had commenced, with the project expected to add an additional 82,000 bpd of refining capacity when construction is completed. This will result in 70% expansion of existing fuel production, including diesel (90%), gasoline (37%), kerosene (93%), jet fuel (93%), LPG (91%), naphtha (175%) and propylene (44%).

The SRIP will see five new units join the refinery’s existing residue fluid catalytic cracker, enabling the facility to refine heavier crude oil and improving Omani crude utilisation levels. The refinery will be able to handle all primary initial quantities entering its units, allowing for high-quality output and production of high-value petrochemical projects. The project is also expected to improve efficiency and productivity, boosting integration with Sohar’s existing aromatics and polypropylene plants, reducing current import requirements, which reached 50,000 bpd of petroleum products between September 2013 and September 2014, according to GTIS tanker data compiled by the EIA.

Duqm Refinery

Billions in investment has been earmarked for construction and expansion at the Port of Duqm, including a $1.5bn dry dock that started soft operations in 2011. Duqm offers significant geographical advantages, located just outside the Strait of Hormuz, the sole passageway into the Gulf, through which 20% of all oil and 35% of oil traded by sea passes.

The Duqm Refinery and Petrochemicals Complex is one of the largest oil and gas projects under development in Oman, with a $6bn first phase expected to deliver a new merchant export refinery offering capacity of 230,000 bpd. The Duqm Refinery and Petrochemical Industries Company (DRPIC), a 50:50 JV between the OOC and Abu Dhabi’s International Petroleum Investment Company, is responsible for developing the Duqm refinery. The new refinery is expected to use delayed coking technology for “bottom of the barrel” processing, which will improve crude utilisation rates using hydrocracking, hydrotreating and LPG treatments, as well as kerosene treatment and sulphur recovery, according to DRPIC officials. A concurrent project at Ras Markaz near Duqm will also see construction of a mammoth crude storage terminal, offering capacity for 200m barrels, while the project’s second phase, which would include an associated petrochemical complex, could bring the total value of the project to $15bn.

Government entities have already signed on to provide support services for the refinery. OGC will lay a pipeline to supply natural gas for utilities from central Oman’s Saih Nihayda to the Duqm Special Economic Zone, which will host the refinery, while the Central Utilities Company, a JV between Takamul and Sembcorp Utilities, plans to develop and operate seawater intake facilities for the complex. The Duqm Petroleum Terminal Company, a partnership between OOC and the Port of Duqm Company, will invest to develop and operate a liquid jetty, which will handle ships carrying crude oil for processing, as well as refined petrochemical exports.

In June 2014 the DRPIC announced that it would launch a request for proposals for the project’s first phase in the third quarter of 2014, following which it would float a tender for the key EPC package during the second quarter of 2015. A contract award for site preparation works is expected during the first quarter of 2015, while the DRPIC expects to award the EPC contract by the second quarter of 2016, with the refinery expected to begin operations in 2018/19.

Участие иностранных компаний в развитии нефтегазодобычи

Энергетика (Oman’s Energy)

Участие иностранных компаний в развитии нефтегазодобычи (International Interest)

The Ministry of Oil and Gas (MoG) is responsible for overseeing Oman’s hydrocarbon sector, including coordinating projects in partnership with the private sector. The Oman Oil Company (OOC), operating under the MoG, is responsible for energy investments, undertaken by subsidiaries including Takamul and Oman Oil Company Exploration and Production, while the Oman Oil Refineries and Petroleum Industries (ORPIC) controls the sultanate’s refining sector, and owns both operating refineries: Mina Al Fahal Refinery, in Muscat, and the Sohar Refinery, located in proximity to ORPIC-owned aromatics and polypropylene plants.

Petroleum Development Oman (PDO), which is 60% owned by the government, 34% by Royal Dutch Shell, 4% by Total and 2% by Portuguese firm Partex, holds the vast majority of Omani oil reserves, and oversees approximately 70% of total crude production in the sultanate. The company also represents the driving force in natural gas production, accounting for nearly 100% of total supply, outside of contributions from Occidental Petroleum and Thailand’s PTTEP.

Gas transmission and distribution is directed by the Oman Gas Company (OGC), an 80:20 joint venture (JV) between the MoG and OOC, while Oman Liquefied Natural Gas (OLNG) – owned by a consortium including the government, Shell and Total – operates all liquefied natural gas (LNG) activities in Oman through its three liquefaction trains in Qalhat near Sur.

International Interest

International oil companies (IOCs) play a prominent role in Oman’s oil industry, and the government frequently enlists IOCs to undertake new exploration and production projects, particularly those utilising EOR and natural gas extraction projects. Oman’s vast, rocky and mountainous terrain has produced some of the most technically challenging fields in the region, and contract terms for IOCs have become more favourable in the sultanate than anywhere else in the GCC. “Oman is different in that the country’s hydrocarbon resources are spread over a large area and hard to extract. Because of this, the country has been more receptive to IOC involvement in the sector,” Shahrokh Etebar, CEO of CC Energy Development, told OBG. IOC Occidental Petroleum, for example, is the second-largest oil producer in Oman through Oxy Oman, while other major players include Shell, BP, Total, CNPC, KoGas, Partex and Repsol.

As in the rest of the GCC region, Oman is highly dependent on oil revenues, although the sultanate’s Vision 2020 economic development plan aims to reduce oil’s share of GDP to 9% by 2020. This ambitious goal is unlikely to be achieved within five years; Oman is dependent on oil export revenues, while rising domestic consumption and a growing petrochemical sector that is heavily reliant on liquefied petroleum gas (LPG) and natural gas liquids (NGL) means the sultanate will find it challenging to reduce oil dependency, at least in the short term. Indeed, the hydrocarbons sector accounted for 85.7% of government revenues in 2013, according to the Central Bank of Oman (CBO), while oil and gas revenues comprised 39% of GDP, and 66% of total merchandise exports, including re-exports.

Методы повышения нефтеотдачи

Энергетика (Oman’s Energy)

Методы повышения нефтеотдачи (EOR)

Oil and gas production in Oman relies heavily on EOR, which has helped production improve from 710,000 bpd in 2007 to current levels of around 945,000 bpd. PDO is already working to boost production at Yibal, a mainstay of Omani production, through traditional water and steam flooding, while a number of up-and-coming EOR techniques, including polymer and miscible techniques, are already employed at fields in Oman. Growing natural gas consumption has led the government to pursue new solar-generated EOR projects, following a successful pilot project in 2013.

PDO’s Block 6, which spans the Marmal, Harweel and Qarn Alam fields, is at the centre of current EOR activities. Block 6’s fields employ EOR techniques including polymer EOR, which uses polymer fluids rather than water injection to access heavier crude reserves, and is employed at Marmal, miscible gas EOR in the Harweel field, and thermal/steam injection EOR at Mukhaizna, Marmul, Amal-East, Amal-West and Qarn Alam fields.

One of the most commonly used EOR processes in Oman is thermal, or steam injection, which involves injecting gas or solar-heated steam into producing fields to facilitate the flow of heavier oil. Steam injection at Qarn Alam could enable the field to increase production by an additional 40,000 bpd by 2015, using a process in which steam drains oil to lower producer wells, while the EIA reports that thermal EOR could add 23,000 bpd of production at the Amal east and west fields by 2018. Steam injection EOR is also being deployed at the Mukhaizna, Marmul, Amal-East, Amal-West and Qarn Alam fields. Outside of water and steam injection, miscible EOR is one of the most commonly used EOR techniques in Oman. Miscible EOR entails pumping oil-dissolving gases into heavy reserves, facilitating higher flow rates. As a result of this, at Harweel developers were able to produce an additional 40,000 bpd, according to the EIA. EOR has also been introduced at the Karim cluster, comprised of 18 small fields flowing to the Nimr production facility, and expected to boost production from 18,000 bpd to 35,000 bpd, and the Harweel cluster, where production is expected to expand to 100,000 bpd from 44,000 bpd.

However, miscible gas and gas-powered thermal EOR processes are adding pressure to the sultanate’s already-limited natural gas resources. According to the MoG, gas injection into oilfields stood at 319.6mcf per day in 2013, a 5% increase over 2012, and expected to further grow as the share of production from EOR rises from 3% in 2012, to 25% by 2020. Miscible and steam injection schemes consume sizeable quantities of natural gas, and the sultanate has recently moved forward on innovative new solar-powered EOR schemes in an effort to reduce EOR-driven gas consumption, in partnership with American firm GlassPoint (see analysis.) PRODUCTION: Average daily production of oil has rebounded in Oman over the past seven years, despite earlier declines at major fields, due in large part to the introduction of EOR techniques. The National Centre for Statistics and Information (NCSI) reported that oil production stood at 852,000 bpd in 1995, expanding to a peak of 955,000 bpd in 2000, before dropping to 710,000 bpd in 2007, as mature fields began to decline. The government was able to halt that decline with the introduction of EOR, although recent discoveries of new reserves have also helped bolster production, which reached 918,500 bpd of crude oil in 2012. Production rebounded further in 2013; according to the CBO, Oman’s daily average increased to 941,900 bpd, while total annual crude oil production grew by 2.3% in 2013 to 348.3m barrels, from 336.2m barrels in 2012. The EIA expects the government to maintain average production of 940,000 bpd until 2018.

Production growth slowed in 2014, expanding by 1.1% during the first seven months of the year to reach 200m barrels, compared to 198m barrels during the same period in 2013, according to the NCSI. The increase in oil production was attributed to growth in crude production, which expanded by 2.5% to reach 182.3m barrels, compared to 177.8m barrels between January and July 2013, although condensate production declined by 11.8% to reach 18.1m barrels during the same period. Average crude production stood at 945,600 bpd, against 935,700 bpd during the same period in 2013.

Ценовые параметры нефтегазовой промышленности Омана

Энергетика (Oman’s Energy)

Ценовые параметры нефтегазовой промышленности Омана (Prices)

Although production has seen a remarkable resurgence in the previous seven years, falling oil prices are a concern for the economy, as indeed they are to all GCC economies. Oman’s sole export stream is its Oman blend, a medium-light, high-sulphur crude product whose price averaged $105.50 per barrel in 2013, compared to $109.60 in 2012.

The NCSI reported that oil prices per barrel declined by 0.3% during the first half of 2014, dropping to $105.40 per barrel, compared to $105.70 in 2013, and CPI financial reported in October 2014 that prices averaged $103.43 per barrel between January and mid-October 2014. The IMF also forecast world oil prices to average $104.17 a barrel in 2014, and $97.92 a barrel in 2015, although these projections were made in May 2014; between June and mid-October, the global oil benchmark shrank more than 20% to reach an average of $92 a barrel, from a 2014 high in June of $115 per barrel. OPEC supply has remained high, with Saudi Arabia moving to maintain its market share by dropping prices and maintaining export levels, while demand in the US and Europe has dropped off.

Oman’s fiscal breakeven price for oil in 2013 was set at $104 per barrel for the 2013 budget, slightly below 2012’s $109 per barrel, but considerably higher than in Saudi Arabia ($92), UAE ($90), and Kuwait ($59.) In July 2014, the Economist Intelligence Unit warned that Oman’s national account faces a serious deficit if the price of oil drops, and remains, at a price substantially lower than $106 per barrel, while ratings agency Standard and Poor’s (S&P’s) reported in June 2014 that of all the GCC nations, Oman and Bahrain are the most vulnerable to declining oil prices. Prices have fallen substantially lower than $104-$106 per barrel; on October 15, Oman blend prices hit a four-year low, falling to $83.06 per barrel. Then, in mid-December 2014 Oman blend price dropped to a low of $60 per barrel.

Географическое распределение экспорта энергетических ресурсов Омана

Энергетика (Oman’s Energy)

Географическое распределение экспорта энергетических ресурсов Омана (Exports)

With prices forecasted to remain weak into 2015, Oman is facing diminished oil revenues, highlighting the need to enhance downstream value addition. “Oman is at the mercy of the global energy market. As an oil producer, volatility on the global scene causes waves and stalls and developments here at home,” said Reinhart Samhaber, general manager of DNO Oman, a Norwegian exploration and production company focused on the Middle East and North Africa.

In 2013 oil exports showed strong growth, rising by 8.7% to reach 304.3m barrels, compared to 279.8m barrels in 2012, but have since slid in the wake of declining world prices. The NCSI reported that oil exports declined by 3.5% during the first seven months of 2014, falling to 171.9m barrels, compared to 178.2m barrels during the same period in 2013. China represents Oman’s largest export market, buying 382.8m barrels, or 50% of Oman’s total production in 2013, followed by Japan (104.4m barrels), Taiwan (91.3m barrels), Singapore (54.4m barrels), Thailand (51.9m barrels), South Korea (29.8m barrels), New Zealand (16.4m barrels), India (14.2m barrels), and the US (5.5m barrels.) In 2014 most of these countries reduced their imports; Although imports to China expanded by 16.9% to reach 117.1m barrels between January and July, Taiwanese imports declined by 6.9% to 20m barrels, while Japanese imports recorded a 29.5% decrease, reaching 11.6m barrels compared to 16.5m during the same period in 2013.

Газовая промышленность Омана

Энергетика (Oman’s Energy)

Газовая промышленность Омана

Natural Gas

The CBO reported that Oman contained 24.91trn cu feet of aggregate gas reserves as of 2013, with 35 producing gas fields currently in operation. In 2011, the sultanate was the fifth-largest dry natural gas producer in the Middle East, and 26thlargest worldwide, with a significant portion of production stemming from oil extraction, leading to heavy new demand on gas supply as EOR projects ramp up.

The sultanate inaugurated two new LNG facilities, in 2000 and 2005, boosting LNG production, which had averaged 154bn cu feet annually between 1990 and 1999, according to the EIA. The NCSI reported that non-associated production, including imports, declined by 6% between January and July 2014, reaching 641bn cu feet, compared to 681.82bn cu feet during the same period in 2013, while associated production shrank by 0.4% to 120.18bn cu feet, compared to 120.67bn cu feet between January and June 2013.

Domestic consumption has expanded considerably over the past decade. The EIA reports that natural gas consumption rose by 168% between 2002 and 2011, with total production reaching 1.31trn cu feet in 2013, including 242.04bn cu feet of associated gas, and 1.07trn cu feet of non-associated gas, a 3.2% increase over 1.27trn cu feet in 2012. The use of natural gas in power generation grew by 9.5% to reach 135.08bn cu feet between January and end-June 2014, from 123.35bn cu feet in the first half of 2013. Growth was driven almost entirely by residential demands; consumption by industrial areas declined to 11.3bn cu feet by the end of June 2014, and consumption by the industrial sector also declined by 5.1% to 362.04bn cu feet, while oilfield consumption declined by 19.4%, to reach 132.57bn cu feet, according to the NCSI. Oman’s leadership has recognised the need to shore up Oman’s gas reserves, and Salim Al Aufi, newly-appointed undersecretary of the MoG, said in March 2014 the ministry plans to expand gas production by an additional 17.65% between 2014 and 2018, to reach 4.24bn cu feet per day.

Iran & Khazan

In a move expected to further bolster supply, the government signed a memorandum of understanding with Iran for a natural gas import contract, which could see a $60bn, 25-year supply deal commence in the next several years, via a pipeline running under the Gulf of Oman. Iran is expected to supply Oman with 706.3m cu feet of gas per day. More significantly, the sultanate is home to the Khazzan tight gas fields, which could offer an additional 1bn cu feet per day of capacity of natural gas. BP Oman is currently developing the fields, announcing plans to begin production in 2017, while the offshore Abu Butabul field in Block 60 became the first producer of tight natural gas in October 2014, with full operations expected to deliver an additional 70m cu feet per day (see analysis.) GAS EXPORTS: As a member of the Gas Exporting Countries Forum, the sultanate exports natural gas as LNG through two liquefaction facilities near Sur, around 200 km south of Muscat. Almost all LNG exports are sold to Japan and South Korea, and export volumes have risen in recent years. The MoG reported that total LNG exports expanded by 7.9% to reach 8.93m tonnes in 2013, from 8.37 tonnes in 2012, nearly a three-fold rise over 2.32m tonnes in 2003. In September 2013, OLNG and the government-owned Qalhat LNG began a merger in an effort to streamline the sultanate’s LNG sector. The new company is also called Oman LNG, and today it controls all three of the sultanate’s LNG trains, which offer a combined capacity of some 500bn cu feet.
Oman’s sole natural gas pipeline, the Dolphin pipeline, runs from Qatar to Oman via the UAE, and the sultanate imports an estimated 51bn cu feet of natural gas from Qatar annually. Imports are becoming increasingly necessary to meet rising domestic consumption, which expanded by nearly 390bn cu feet between 2000 and 2011, according to the EIA. As a result of rising consumption, OLNG plans to divert all currently exported volumes of LNG into the domestic market by 2024.

The decision can be partially attributed to challenges in securing the best prices for long-term gas supply contracts. As Interfax Energy reported in August 2014, many of Oman’s LNG export contracts were signed over a decade ago, while changes to the gas market have seen production and import prices soar since then. Although, as Harib Al Kitani, the CEO of OLNG, has reported, Oman’s LNG is among the highest-priced LNG exported to South Korea, with South Korean imports regularly selling for more than $18 per million British thermal units (BTU), prices to Japan average $10 per million BTU, compared to average import prices of $16.20 per million BTU, making Oman Japan’s cheapest source of LNG imports.

The sultanate earned an estimated $4.5bn from LNG exports in 2013, a $150m increase over 2012, but OLNG is under pressure to renegotiate terms of its contracts with long-term buyers, on the back of rising domestic demand that led the government to increase LNG prices for select industrial users in April 2012. Average prices for gas supplied to the Oman India Fertiliser Company in Sur were raised to $1.50 per mBTU, with incremental annual increases expected to bring the rate to $3 per mBTU by 2016.

Although the government is also moving to reduce gas demand in the power sector, aggregate consumption is expected to grow between 10% and 15% in 2014, according to Interfax Energy. If Oman is to meet its long-term export commitments, it may be forced to use gas produced at the Khazzan tight gas reserves, which carry a much higher production price tag, meaning the sultanate will be forced to renegotiate its contract rates, or risk subsidising its LNG customers. Unfortunately, none of Oman’s LNG contracts will be up for renewal in the near term, with most set to expire in 2024 or 2025, which could pose a significant challenge for negotiators attempting to retain valuable gas revenues.

Транспортная система Омана

Транспортная система Омана - (Domestic transport sector)

Muscat-Sohar Pipeline

The government has been working to expand the sultanate’s domestic pipeline infrastructure, including a line connecting Duqm’s planned storage terminal to existing export infrastructure in central Oman, as well as the Muscat-Sohar pipeline, which would connect Oman’s two current refineries and reduce tanker traffic between the cities’ export terminals. In January 2014, ORPIC and Spanish firm Compañía Logística de Hidrocarburos entered into a joint venture to construct and operate the 280-km Muscat-Sohar pipeline, connecting the Mina Al Fahal refinery to Sohar, as well as a new terminal in Jifnain, near Muscat, and to the Muscat International Airport.

Knock-on effect for domestic transport

The focus on agri-industry is expected to have positive knock-on effect for other industries, including the domestic transport and logistics sector, which will benefit from increased freight traffic between Sohar and processing centres to other markets.
The planned construction of a national rail network, scheduled to be completed before the end of the decade, will alleviate the pressure on road transport facilities. Work is set to begin later this year to build the first stage of the multi billion-dollar network, a 207km line between Sohar and Buraimi on the border with the UAE.

The line will link to the wider regional network, facilitating imports of materials and exports of processed foodstuffs and other goods between the GCC members. Further sections of the 2235km rail grid will eventually span the length of the Sultanate, connecting Oman’s most populated areas, the ports and industrial centres.

Oman’s Rail project picking up pace

A recent economic update from the Oxford Business Group (OBG) notes that work on Oman’s national rail network – which forms part of a wider rail system linking all the countries of the GCC – is picking up pace, with advanced planning work now under way and construction set to begin next year.

According to the OBG update, the state-owned Oman National Railway Company recently announced it was opening the pre-qualification tender to provide infrastructure and information technology systems for the initial stage of the 2,244km network. The tender, open to local and foreign bidders, covers the construction of the first section, which runs from the border with the UAE at Buraimi to the port of Sohar. The projected cost of this phase is around $2.6bn, with the expense of the full project expected to amount to US$15bn.

Ahead of the opening of the pre-qualification process, Oman had sealed a series of agreements that have laid the groundwork for the railway. Central to this was the awarding of a US$36mn contract to Italian rail engineering firm Italferr, which is to act as the preliminary design consultant for the project and has already begun work. Construction on the first stages is due to start in early 2015, with contracts set to be tendered for the initial building phase later this year.

The OBG update also noted that to finance at least part of the work, Oman may issue debt of up to US$3bn. According to Oman National Railway Company officials, both conventional bonds and sukuk are being considered. Some contracts could be structured as public-private partnerships, with the winning bidders taking on financial and operating risks.

Oman’s extended network

The GCC rail network has been in development since 2008, when the member states’ transport ministers agreed to undertake a feasibility study. This resulted in an agreement to back the project, which foresaw the construction of a network running up to the Iraqi border and terminating at Muscat.

However, rather than have the final terminus at the capital, Oman’s government decided to run the line across the country to the Arabian Sea coast and then down to the Yemeni border, leaving open the option of extending the network further south.
According to Abdulrahman al Hatmi, one of the directors of the Oman National Railway Company, the decision to carry the network to the industrial port cities of Duqm and Salalah will have a major positive impact on the economy.

While acknowledging that extending the network to the two ports was an expensive proposition, Hatmi said the opportunities that would be opened up would more than justify the cost, both in terms of economics and transport security.

“One of the key changes we’ve made is to connect to Salalah, which is the mouth of the region and will play a major role in transforming the whole logistics map,” he told Bloomberg on February 6.

By extending the line to Duqm and Salalah, Oman would offer an alternative route for freight transport should regional tensions disrupt shipping through the Strait of Hormuz. More importantly, the rail link will allow Oman’s ports on the Arabian Sea and its logistics sector to achieve their full potential. International shipping firms may find it quicker to berth vessels in Omani harbours and have their cargoes shipped across the country by rail to destinations around the region, rather than face delays at congested ports inside the Gulf.

According to Vic Allen, acting CEO, Oman Airports Management Company, the national rail plans complement Oman’s airports expansion project and capitalise on the country’s strategic location. “Once the projects are completed, Oman will be well-placed to connect the GCC to African markets,” he told OBG.

Vital connections

One challenge facing Oman, at least in the shorter-term, is the uneven progress being made across the Gulf-wide network. Solid headway has been made on some parts of the international grid, including in Saudi Arabia and the UAE. However, other states have not made such progress. Reports suggest, for example, that Kuwait’s section of the network will not be completed before 2019 at the earliest, a year behind schedule.

In the short term, gaps in the network at the regional level would devalue to a degree the ability of the grid to deliver freight quickly and cost effectively. This would be especially costly for Oman, given its ambitions to be the first (or last) station on the line.

The Oxford Business Group publishes authoritative reports and on-line economic briefings covering 34 countries around the world from its offices in Istanbul, Dubai and London and a network of local bureaus in the countries in which it operates.
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Агропромышленный комплекс и пищевая промышленность

Агропромышленный комплекс и пищевая промышленность (Agri-industrial business and food-processing)

Major investments in agri-businesses this year look set to help Oman improve food security and develop an export capacity in processed foods from its new hub in the northern port city of Sohar. The expansion will also produce spin-off benefits for the freight and packaging sectors.

The development of Sohar as a major food-processing centre will see the construction of an OR15.5m ($40.3m) flourmill with a daily capacity of 500 tonnes when production begins in late 2017. Oman Flour Mills, the country’s largest flour producer with a daily output of 850 tonnes, said in a statement in January that the new mill had an eventual capacity of up to 2000 tonnes.

The agri-industrial hub will also feature Oman’s first sugar refinery, which will eliminate the need to import the more than 120,000 tonnes of refined sugar consumed annually.

Like other countries in the Gulf region, the Sultanate has to import most of its foodstuffs due to climatic conditions and land-use restrictions. It is working to enhance food security by increasing cultivation and buffer food grain stocks, with extensive storage facilities being developed at Sohar and elsewhere.

The $200m facility, commissioned by the Oman Sugar Refinery Company (OSRC), is expected to come on line later this year or early 2016. With a planned capacity of 700,000 tonnes in its initial stage, and 1m tonnes in the second phase of the project, the refinery will supply the local market and support the growth of the processed foods sector.

In addition to private sector investment, the government is also offering support to the industry via funding announced in its January budget. Plans to develop a OR100m ($260m) plant in a joint venture with poultry products firm A'Saffa Foods is part of a major initiative to give Oman near self-sufficiency in poultry products. Oman Food Investment Holding – a new state enterprise overseeing agri-business investments – will lead the project, in which A’Saffa has agreed to take a 20% stake. Works on the mega facility are set to begin later this year, although a decision has yet to be made on its location.

Spin-offs for packaging sector

Underpinning the expansion of Oman’s food processing sector will be the construction of a $170m agricultural handling terminal at Sohar. Work on the terminal is scheduled to begin in March, and when completed it will be able to handle 700,000 tonnes of grain and 1.5m tonnes of raw sugar imports annually.

Packaging is another sector lined up to benefit from the expansion of food processing industries. “Our aim is to attract new investment in food and food processing industries and create a cluster than can feed the region,” said Edwin Lammers, Sohar Port & Freezone’s executive commercial manager. “Grain silos and a sugar refinery are already in the pipeline, and as this sector grows, the opportunities for packaging companies to serve multinational businesses will grow,” he added.

Investments are already in the pipeline to meet the extra demand for packaging following the planned addition of food processing projects in and around Sohar. Among those, Ompet, a joint venture between the Oman Oil Company and LG International, plans to open a $600m beverage packaging factory in the Sohar Port & Freezone in 2016, turning out 250,000 tonnes of plastic bottles a year at full capacity.

One of the major aims behind the project is to reduce the import requirements of Polyethylene terephthalate (PET) products in Oman and the region more generally. It will also leverage Oman’s low-cost energy resources to reduce the cost of pre-packaged food imports. Other developments utilising the output from the petrochemical plants in the region will see packaging materials capacity rise to 1.5m tonnes annually, according to port data.

Туризм и логистика

Туризм и логистика
Logistics and tourism in Oman ripe for investment

The Sultanate of Oman’s tourism campaigns are now going full-blast after prestigious and trusted global travel and news publications included the country on their list of top holiday destinations for 2015.

The country’s famous tourist attractions are gaining even more popularity among foreign visitors, leading to a 11.5 per cent tourist arrival growth during the first half of 2014 compared to the same period of the previous year, based on statistics retrieved from the National Statistics & Information Center in Oman.

Skift, the largest industry intelligence and marketing platform in travel, recently picked Oman as the one place to visit this year. The Sultanate’s rich heritage, desert, rugged coast and beaches, varied water sports and diving activities were cited as among its major tourist draws. Oman’s touristic appeal was also attributed to its enormous forts, green valleys, old-world bazaars, and famous traditional Arabian hospitality as well.

Oman also recently ranked 20th in The New York Times’ 52 places to go in 2015. The Middle East’s ‘best-kept secret’ in tourism has now been fully unveiled as one of the world’s highly favored places among travelers. In including the country on its list, the well-respected American publication pointed out the Sultanate’s scenic mountain peaks, dramatic coastlines, and numerous ‘wadis’ (valleys).

UK’s The Telegraph (, for its part, recognized the city of Khasab as one of the world’s 10 most beautiful ports. The city ranked number seven on the list released by the news organization. Meanwhile, Nizwa landed fifth on the Top 10 Cities list of Rough Guides (, the leading publisher of travel and reference guides. Dating back to the 14th Century, Nizwa is one of the oldest cities in Oman, and was once the capital for a long period of time, (Source: The publication took note of the city’s historical importance and its continuing appeal to artists, scholars and traders from across the region. Adding to Nizwa’s roster of recognitions is its recent selection as the Islamic Culture Capital of the Arab region for 2015.

Her Excellency, Maitha Bint Saif al Mahrouqy, the Undersecretary of the Ministry of Tourism in Oman, said: “The Sultanate is now becoming the top choice for regional and international travelers who are looking to experience the modern aspects of the Arab World while, at the same time, wanting to immerse in its rich cultural heritage and traditions. Ever since the Ministry ramped up its strategic and comprehensive tourism campaigns, we have been witnessing an increase in interests on the destination from our key markets. The dramatic growth is not the achievement of the Ministry alone, though. It is the result of collective efforts by all concerned organizations who believe in the beauty of the country and what it can offer to the global tourism stage. Furthermore, our intensified initiatives are aligned with the government’s recognition of tourism’s prominent role in job creation, heritage conservation and overall socio-economic development.”

The broad range of investment opportunities emerging in Oman against a backdrop of steady, economic growth was highlighted in a wide-ranging video interview given by Oliver Cornock, Middle East Managing Editor for the global publishing, research and consultancy firm Oxford Business Group (OBG).

The interview, in which Cornock shares his thoughts on Oman’s economic growth story with the economic analyst Nicholas Anderman, looks at the Sultanate’s economy with a backdrop of lower oil revenues, yet continuing high levels of budget spending.

Cornock told Anderman that efforts to diversify Oman’s economy, coupled with the Sultanate’s strategic location on several major trade routes, had produced “myriad opportunities” for investors, particularly in the supply chain and logistics segments.

Heavy investment in Oman’s port infrastructure, he said, which included the construction of new facilities at Sour and Duqm, alongside expansion work at the older ports of Sohar and Salalah, had set the scene for Oman to capitalise on its position at the tip of the Arabian peninsula, while a long border with Saudi Arabia offered direct access to one of the region’s economic powerhouses.

“We’re seeing infrastructure being built around a huge capacity for import and export,” Cornock told Anderman. “Add to that a rapidly developing road system, airport expansion and the GCC-wide rail network project, and it becomes clear that Oman is ideally suited to the role of transhipment hub for all manner of goods.”

Cornock told Anderman that Oman’s ambitious plans for tourism, which include boosting the industry’s contribution to GDP to 3% over the next six or seven years, would also bring significant opportunities for investors.

“Oman currently sees 2.1 million tourists a year which is already a massive increase on what it has had historically. But that’s pegged for much greater growth,” he commented. “Some 54 new hotels are currently being developed, on top of 23 last year, which signals a huge increase in capacity coming onto the market, broadening the scope for related and ancillary services across the tourism and hospitality sectors.”

Turning to foreign trade, Cornock said the long list of free trade agreements (FTAs) signed with other nations, alongside the free movement of goods Oman enjoys as a GCC member, provided firm foundations for future growth.

The United States-Oman FTA, signed in 2009, had strengthened economic and commercial ties between the two countries significantly, he said, leading to a 60% increase in exports to the US, while foreign direct investment (FDI) from the States into the Sultanate had risen by 12% since the deal was inked.
Posted: 17/03/2015 7:15 am EDT

Банковский сектор

Банковский сектор Banking

Bank Sohar was named as the ‘Best Financial Brand Oman 2014′ by renowned UK based Global Brands Magazine. This award was presented to the Bank at a recent ceremony held in Dubai, adding yet another accolade to its credit as well as cementing its position as one of Oman’s leading banking institutions.

The Bank was awarded this recognition at an event held on December 15 at The Address Hotel, in Downtown Dubai, UAE. Receiving the award on behalf of the Bank were Mr. Abdul Rasool Al Balushi, AGM of Credit Risk, and Mr. Mohammed Tahir Al Lawati, AGM and Head of Mid Sector Corporate.

Commenting on receiving the prestigious award, Mr. Rashad Ali Al-Musafir, Acting CEO of Bank Sohar said, “It is indeed an honour for us to have received such a globally renowned award. Being named as the ‘Best Financial Brand Oman 2014′ stands as a testament to the dedication of our Management and Staff towards achieving excellence and their constant endeavour towards consistently improving the Bank’s products and services. At Bank Sohar, we have been committed towards adhering industry best practices whilst at the same time setting new standards for the banking sector, and this award will serve as further motivation to expand our horizons.”

The award was presented to Bank Sohar after the UK based Global Brands Magazine analyzed its performance in 14 categories, encompassing every aspect of its business. As a result, this award is a clear reflection of Bank Sohar’s performance for the financial year ending December 2013, which was yet another exceptional year for the Bank. Building on the previous year’s outstanding performance, Bank Sohar had registered a year-on-year net profit growth of 16.77 per cent amounting to OMR 26.871mn. The operating profit for the financial year 2013 witnessed a growth of 10.79 per cent from OMR 28.644Mn in the previous year to OMR 31.735Mn. Furthermore and despite the banking industry in Oman becoming increasingly competitive, Bank Sohar has, in a short span of time, managed to successfully grow and become one of the leading Banks within the country.

In Addition to ‘Best Financial Brand Oman 2014′ Award, the Bank has also won a slew of other awards locally, regionally, and internationally in 2014. Among its accolades, the Bank has received ‘Business Excellence Award’ by Texas based, World Confederation for Business (WORLDCOB) at the Bizz Arabic 2014 Awards, ‘The Diamond Eye Award for Quality, Commitment & Excellence’ from the French based Otherways Management & Consulting Association, ‘Strategic Award’ for its corporate website ( from the Lebanon based Pan Arab Excellence Awards Academy as well as from Oman Web Awards.

The Bank was also awarded the ‘Best Bank for Fast Growth / Middle East’ Award from Milan based IAIR Magazine, the ‘Fastest Growing Bank in Oman 2014′ from UK based International Finance Magazine (IFM), and also recognized as one of the ‘Top 5 Large Corporate Enterprises in the Sultanate’ for the third consecutive year at the Alam Al Iktisad Wal Amaal (AIWA) Awards. It also received the ‘Best Customer Service – Retail Banking’, ‘Best Cash Management’ and ‘Best Corporate Card’ awards for its Retail Division as well as the ‘Best Branding Award’ for the Bank’s Islamic Banking Window – Sohar Islamic from CPI Financial. On the CSR front, Bank Sohar won the ‘Green Campaign of the Year’ award for its year-long environment awareness campaign ‘Saving Water, Electricity… And Our Planet’ at the ‘Oman Green Award 2014′ as well as being named the ‘Most Socially Responsible Bank Oman 2014′ by UK based International Finance Magazine (IFM). More recently, the Bank also received the distinguished Tatweej Academy’s ‘Golden Order of Merit in the field of CSR’.

Head-quartered in United Kingdom, Global Brands Magazine is an independent branding magazine that was established with the aim of honoring excellence in performance and rewarding Companies across different sectors. The awards are given to acknowledge key players who strive for excellence and provide a platform for recognition. The award also aims to identify and create awareness about the significance of exceptional service delivery and reward performance with the ultimate global recognition. In fact, more than 3,300 Banks were evaluated in the last study conducted by them.

National Bank of Oman strengthens Board with two appointments

National Bank of Oman today announced the appointment of His Excellency Abdul Rahman bin Hamad Al Attiyah and Mr. Mohammed Ismail Mandani Al Emadi to the Board.

HE Abdul Rahman bin Hamad Al Attiyah is now a member of National Bank of Oman’s Board Risk Committee (BRC) bringing a wealth of experience and expertise to the role. He is currently Minister of State for Qatar and, since March 2014, sits as a member of the board of The Commercial Bank of Qatar.

Previously, he served as Qatar’s Ambassador in Geneva, Saudi Arabia, France, Italy, Greece, Switzerland, Yemen, and the Republic of Djibouti. He also spent time as a permanent representative to the United Nations in Geneva, the Food and Agriculture Organization (FAO) in Rome, and UNESCO in Paris. HE Al Attiyah was the former Secretary-General of the Gulf Cooperation Council (GCC) from 2002 until 2011.

Mohammed Ismail Mandani Al Emadi has been appointed as Chairperson of the Board Risk Committee (BRC) and member of the Board Audit Committee (BAC). With over 30 years of experience in the banking industry, he also sits as a member of the board for The Commercial Bank of Qatar. Mr. Al Emadi has held a number of key roles at The Commercial Bank of Qatar until 2006, after which he served as Chief Executive Officer of Qatar Real Estate Investment Company QSC, up until 2011, and also served as its Director from 2003 until 2005.

Mohammed Mahfoodh Al Ardhi, Chairman of National Bank of Oman, commented: “We are very pleased to announce that HE Al Attiyah and Mr. Al Emadi have joined the Board of National Bank of Oman and they will support our next phase of growth. Both individuals have strong track records in the banking sector and will bring formidable experience and expertise to augment the Bank’s already compelling offering.”

“National Bank of Oman is widely respected and renowned for its emphasis on building strong long-term relationships with clients. We look forward to working with HE Al Attiyah and Mr. Al Emadi to ensure the Bank continues to enjoy considerable success.”

Banks in Oman and Bahrain are more vulnerable

Following a decline in oil prices, banks in Oman and Bahrain are more vulnerable than the rest of the oil-exporting countries in the GCC, says a new report from Standard and Poors’ (S&P).

The credit rating agency’s latest report - How Will Lower Oil Prices Affect Banks In 10 Oil-Exporting Countries?- focuses on the banking systems in ten oil-exporting countries which includes the six GCC states, Brunei, Kazakhstan, Malaysia and Nigeria.

According to the report, S&P does not expect the drop in oil prices to have any major negative implications on these countries’ banking systems but thinks that banks in Nigeria, Bahrain, Oman and Brunei are more vulnerable than the rest.

While we do not expect oil’s price drop to have any major negative implications on these countries’ banking systems, we think banks in Bahrain and Oman are vulnerable indirectly through the potential drop in investments and economic growth, the report states.
The banking systems of countries with low fiscal buffers, significant economic imbalances and high dependence on oil-related bank deposits may come under pressure, S&P says.

Meanwhile, S&P also believes the risks may be underestimated because some of the oil-related activities fall under the government’s umbrella. The exposure to government and its related entities is significant in some of the GCC countries and particularly Qatar, where it represented almost one-third of the banking system’s loan portfolio as of November 30, 2014, the report states.

After the massive drop in oil prices for the past few months, S&P has revised its price assumptions and now expects Brent’s price to stabilize around $55/bbl in 2015 and increase slightly to around $65/bbl in 2016.

However, oil prices dropped more than one per cent on Monday, with Brent slipping below $62 a barrel over a strong dollar and rise in Libya’s crude output.

According to analysts in a Reuters survey, crude oil prices have probably touched a bottom and should recover in the second-half of 2015 as there will be a production curb due to the collapse in the market last year.

Строительная индустрия

Строительная индустрия
Oman’s construction sector

A multibillion-dollar cash injection from the state is supporting new growth across Oman’s construction sector, amid efforts to encourage the industry to source labour, services and supplies locally to broaden the contribution to its economy.

Oman, which accounted for about 6% of construction and infrastructure projects among the GCC countries as of April 2014, has $150bn worth of programmes planned or underway according to MEED. Oman awarded contracts worth $6bn-$8bn over the past seven years – making it one of the most stable markets in the region – with the value of spending expected to increase thanks to major projects planned over the next five years.

Scope widens

According to the sultanate’s current five-year economic development plan, running from 2011 to 2015, the government has earmarked around OR2.5bn ($6.5bn) a year to develop infrastructure. Priorities of the investment programme include alleviating pressure on Muscat’s ports and airports, and improving connectivity with the rest of the region. Transport is the primary focus of construction investment, accounting for 66% of the total.

The government announced in October 2013 that the country will spend more than $50bn in infrastructure projects over the next 15 years. From this budget, $20bn is earmarked for the transport sector, including Oman National Railway.

Investments have been growing incrementally over the past few years thanks to increasing oil revenues. Indeed, the construction sector performed strongly during the past five years, outpacing the overall economy by notching up average annual growth of 5.5%, according to data from the Oman Society of Contractors. The industry accounted for 5% of GDP in 2013.

A robust pipeline, particularly in the transport infrastructure sector, and investment associated with a burgeoning tourism industry will provide growth of 6.4% in 2014, Business Monitor International (BMI) estimates, while will average out at 5.4% over the next five years. Not only is the scale of construction activity set to rise over the coming year, the scope of building development is also set to expand, according to Youssef Shammas, the managing partner of Target, an Oman-based contractor.

“In addition to the traditional drivers of the construction sector, mainly oil and gas and infrastructure projects, the activity in the power sector and on waste management projects is creating new prospects for local companies,” Shammas told OBG. “One segment that is likely to experience a cooling-off is real estate, due to existing oversupply in the market. However, an increase in projects in rural areas may offset this,” added Shammas.

Looking local

Another concern for construction companies is the impact of the government’s Omanisation policy, which favours firms that guarantee a certain proportion of their workforce is Omani – in the contracting sector, the figure is 30%. With 665,679 foreigners and 57,464 Omanis recruited in the sector – according to the latest statistics from the Ministry of Manpower – this presents several challenges for companies that rely on expatriate labourers and skilled staff.

However, raising local labour participation is seen as instrumental in keeping more of the wage bill within the country. It will also help to offset any skills shortages in the industry resulting from a reduction in the foreign workforce.

In another bid to keep value within the country, the government has bolstered efforts to support the local building material manufacturing sector by the introduction of its “in-country value” (ICV) initiative. The scheme requires firms to source services and products locally, especially in the materials segment, whenever possible. Obligations under the scheme vary between sectors, with the initiative focusing on manpower, developing new businesses, using local contractors for services and local content for the construction industry.

Devaki Khimji, the executive director for oil and gas of Al Turki Enterprises, said the initiative, launched last year, was positive, though it had some limitations, particularly regarding client specifications in the civil engineering space. “ICV is great and all companies should be procuring locally if they can,” she told OBG. “ICV in areas where it makes sense is possible, but it should not be forced in areas where the cost would make the company uncompetitive,” she added.