Oman is a safe port in the oil storm

 By Chris Dalby

Knowing where to invest in the oil industry is easy in the good times and difficult in the bad times. The rise of the U.S. as an oil exporter has threatened the hegemony of OPEC. But one country has quietly made a name for itself, as an oil producer where rule of law, modern infrastructure and peace reward investors…

One of the most peaceful countries in the Middle East, according to the Global Peace Index, Oman’s stability has made it a favorite for oil and gas companies, even though it is not a member of OPEC.
So just how did this small country in the Arabian Peninsula hit on this winning strategy? Oman’s actions in 2017 alone show that three well-defined pillars are interwoven through a vision enabled by the country’s small size, peaceful nature and modern approach.
First, it makes the best of what it has. Although its oil production remains modest, hitting a record 1 million b/d in 2016, the country’s energy policy has seen a laser focus. In January, the government announced that state-held Oman Oil Company would invest $1 billion in oil and gas projects throughout the year. Oman is determined to hit its 2016 benchmark again in 2017, and this investment is partially geared towards that aim.
This initial investment will be divided across the Salalah LPG project, an ammonia project to expand the Salalah methanol unit, the Duqm gas pipeline, the Sohar-Wadi Al Jissi gas pipeline, a large crude oil storage facility at Ras Al Markaz and several other energy projects in the Duqm free zone. In the past, Oman has invested heavily in enhanced oil recovery (EOR) techniques to make the most of its limited resources.
Second, Oman has actively courted foreign direct investments and energy exports, opening new refineries and LNG projects, as well as training local staff to handle the employment needs of international oil players.
Several major deals over the course of 2017 show this approach has paid off. Among others, Eni is convinced by Oman’s potential, signing a memorandum of understanding in May 2017 with the Oman Oil Company, following its win of exploration rights to a 90,000 square kilometer offshore block. Not only. Italian energy giant in November signed an Exploration and Production Sharing Agreement (EPSA) for Block 52, located offshore Oman.
Last September, Oman saw the largest new project begun by BP during the year, with the British firm beginning natural gas production at Khazzan. “BP’s Khazzan project will be hugely important for Oman’s gas supply, with Phase 1 alone supplying 25 percent of Oman’s gas by 2019,” Liam Yates, an analyst at Wood McKenzie, told UPI.

Comfortably enjoying its reputation as a safe haven in a troubled region, Oman has held a series of Invest in Oman forums across Europe, including Dusseldorf, Geneva and beyond, with petrochemicals and the oil industry prime among the candidate sectors for investment. This international push has placed the Oman Oil Company front-and-center as a reliable partner of choice.
Last, but certainly not least, Oman is keen to show it is not resting on its laurels. Whether investors come or not, its legal framework, infrastructure and talent pool have not been left to waste.
For example, the Oman oil industry has taken huge strides to digitalize itself, harnessing big data analytics, remote supervision software and more to become a truly modern energy economy. As oil prices have tumbled, countries that can present reduced costs in key areas such as analytics are more likely to catch the eye of remaining investors.
During the Oman Economic Review Business Summit in early October, Dr. Hatem Nasr, a senior oil and gas advisor for Huawei, said that “technology and digitization is the direction we must be going in. We have seen other sectors do it and overtake market cap of oil and gas companies in the world in just 10 years. We have big data, internet of things, cloud, artificial intelligence, robotics and drones, all of which we can use to improve performance in oilfields.” It seems Oman is listening.
The country also understands the importance of cooperation. This same forum saw representatives from government, local and foreign companies and civil society discuss a common approach to issues such as the country’s credit rating, the training needed by its workers, or the need for alternative fuels.
There was also a common admittance that, while oil executives feel the industry remains lucrative and attractive for graduates, many students have shied away. While no immediate patches were proposed, there was a willingness to adapt to the realities of the industry and the aspirations of potential workers.
“After prices of oil dropped and fewer jobs remaining available to graduates, they have started to move away from oil and gas industry. Currently, there is a strong supply but as we go forward, less graduates are opting for these careers,” said Prabhu Shankar, assistant general manager at MENA HR Solutions.
All these steps show that a strong, central strategy can allow countries such as Oman to truly reap the benefits of their hydrocarbon reserves.

READ MORE: Shining a light on EOR by Mike Scott

about the author
Chris Dalby
Journalist. Editor. China, Mexico, Latin America, Asia, place branding, Olympics, oil and gas, mining, renewable energy, international politics.