Oman to double gas prices for industrial users



REUTERS

Published — Tuesday 8 January 2013

Last update 8 January 2013 2:24 am

| نسخة PDF Print News | A A

MUSCAT: Oman will double natural gas prices for some industrial consumers by 2015, with a rise of 33 percent for 2013 alone, Oman's minister for financial affairs told Reuters yesterday in a rare Middle Eastern move to slash fuel subsidies.
The Omani government and some major industrial consumers have agreed that gas prices will rise from $ 1.5 per million British thermal units (mmbtu) in 2012 to $2/mmbtu in 2013, Darwish Al-Balushi said.
In 2014 prices will rise to $ 2.5, then hit $ 3 in 2015 with further rises expected in years beyond that, he said.
Gas-hungry industry has flourished in the Middle East on fuel priced at a fraction of international levels but its future growth is in doubt unless more sources can be developed.
Omani gas production has risen sharply over the last decade and the non-OPEC oil producer remains a net gas exporter. But rampant demand growth at home means it must tap trickier and more costly gas deposits to maintain exports of liquefied natural gas while satisfying its own gas needs.
Key to Oman's quest to boost production is the Khazzan project. Developer BP has been haggling with the government over how much it can sell any gas produced and the sales price increases announced for the next few years should help make BP's business case.
Rock-bottom gas prices prevalent in the Middle East are a remnant of when gas was a plentiful by-product of the region's oil fields and Saudi consumers still only pay $0.75/mmbtu.
According to industry estimates total upstream conventional gas production costs are around $3/mmbtu, but the cost of projects like BP's tight gas project are thought to be much higher.
Although some big gas users in the region fear that higher feedstock prices could harm their competitiveness, even Oman's plan to double prices by 2015 should not make Omani industry uncompetitive on the global market.
Thanks to an unmatched revolution in North American shale gas production, the price of gas for US industrial users tumbled from highs of around $ 13 per mmbtu in 2008 to a record low of about $ 3 per mmbtu in April 2012, according to the US Energy Information Administration (EIA).
The slump in US prices has worried many petrochemical producers in the Gulf, but US prices have already rebounded and the EIA expects industrial consumers be paying over $5/mmbtu again in 2013, far more than Omani industry will have to pay by 2015.

What's happening around Saudi Arabia

JEDDAH: Maj. Gen. Ibrahim Al Hamzi, director general of prisons, has sacked Brig. Ahmad Al Shahrani, director of Jeddah prisons, after the case of a video clip about prisoners taking heroin went viral, according to local media.Quoting informed source...
RIYADH: Plans are underway to shift the labor dispute commission in the Ministry of Labor to the Ministry of Justice. Related discussions were held here Thursday between Justice Minister Walid Al-Samaani and Labor Minister Mufrej Al-Haqabani.The disc...
JEDDAH: Drifting has taken a heavy toll of young men who spent their time and energy in the pursuit of this dangerous game for lack of family awareness and guidance.Observers said that the last decade witnessed a dramatic increase in traffic accident...
RIYADH: A mass brawl between migrant workers at a company along Al-Thumama Road broke out in Riyadh on Thursday, causing the death of one worker and the burning of two police vehicles.A Riyadh police source said authorities received a report on Thurs...
JEDDAH: Thousands of expatriates living in Jeddah, who are non-Arabic speakers, were excited about the monthlong 36th Jeddah Festival.The Jeddah and summer festivals this year had a number of theatrical events, entertainment programs, fireworks, arti...
MADINAH: In a tragic Madinah incident, two children died and a woman was injured in a fire which broke out in a house.Capt. Naif bin Mohammad Al-Juhani, spokesman for Civil Defense, said the control room received information about the fire incident i...
JEDDAH: Saudi Aramco said it has financed building 63,000 houses for Saudis through the citizen house owning program implemented by the company. The company said it has granted 1,037 loans to Saudis to build new houses in 2014, stressing that this pr...
RIYADH: A special team of officials from the Ministry of Health, led by Deputy Minister Hamad Aldhwilaa, visited hospitals in the southern border area to ensure that services are available to serve patients in the Asir, Jazan and Najran regions.On ar...
DAMMAM: On April 30 1935, drilling started on test well No. 1 in Dammam. After seven months, only gas was found with traces of oil at a depth of 700 meters. So it had to be plugged. Drilling began on Dammam well No. 2 on Feb. 8, 1936, and started pro...
JEDDAH: A team of doctors at King Abdul Aziz Hospital carried out emergency life-saving surgery on a Kazakh pilgrim who was suffering from a rare disease, on the night of Eid Al-Fitr, according to a website.The 17-year-old Kazakh pilgrim was brought...
JEDDAH: Members of sector committees affiliated with the Council of Saudi Chambers have tried to reach a settlement with the Ministry of Labor that would allow laborers to work on their projects during the day.The attempt was made based on an agreeme...
JEDDAH: The increase in school fees has caused parents to remove their children from private schools and enroll them in public schools in Madinah.With the approaching new school year, many parents were surprised to find that school fees were increase...
RIYADH: The size of the tourism industry has crossed the SR100-million mark with around 130 organizations in the field and the revenues generated through festivals are approximately SR11 billion annually, experts have said. The figures have been prov...
JEDDAH: A total of 105 pay-and-park areas have been opened in the city, including Jeddah historical district, downtown market place, Bab Makkah, Al Andalus Street and Palestine Street.Hani Ahmad Abdullah, media spokesperson for Jeddah Municipality, s...
RIYADH: Moroccan Ambassador Abdussalam Baraka has praised “excellent” trade and bilateral relations between his country and Saudi Arabia and expected the ties to grow further.Speaking on the occasion of Morocco’s National Day on Thursday night, the e...

Stay Connected

Facebook