New Energy market report from Business Monitor International: "Oman Oil & Gas Report Q4 2013"

Boston, MA -- (SBWire) -- 11/25/2013 --Strong upstream investment, particularly in enhanced recovery efforts, has allowed Oman to engineer an impressive recovery of oil production. Volumes have rebounded from lows reached in 2007. However we anticipate recent gains to slow. While there is upside risk from ongoing exploration and production, we expect output to peak by mid-decade and gradually decline subsequently. The outlook for gas is set to improve with new supplies, although growth will be incremental over the near term, from 2018 we expect major contributions to supply stemming from continues progress on the US$15bn Khazzan tight gas project. The start of the field should markedly increase supplies; however, we note that rising consumption will continue again and see available volumes for export tighten towards the end of current forecast period in 2022.

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We highlight the following trends and developments in Oman's oil and gas sector:

- Oman has managed to oversee an impressive revival of activity in its hydrocarbons sector. Specifically, the government has channelled efforts and funds into enhanced recovery methods. The results to date have been largely successful, without output recovering from a low of 714,000 barrels per day in 2007, to a forecast of around 935,000b/d for 2013. The redevelopment of existing fields in order to boost recovery rates, as well as the upside offered by healthy interest from international oil companies (IOCs) in the country's upstream, underscore a broadly positive outlook for the oil sector.
- Even with a strong pipeline of investment, we expect overall production to peak by mid-decade and gradually trend downward. While we note healthy upstream activity and high interest pose upside risk to this outlook, our core view is for recent gains in production to dissipate as new supplies fail to offset declines in output elsewhere.
- By 2022, PDO is due to spend some US$11bn alone on 16 major projects targeting development of in excess of one billion bbl of oil. From 2013 - 2017 some 100 wells were due to be drilled and some US $800mn spent in an aggressive hunt for new reservoirs.
- We forecast natural gas production will grow at a slowly over the next several years as supply additions from new projects such as Block 60 and Musandam will be moderate. However, a more dramatic increase is due to come with the start of the Khazzan project, tentatively scheduled to come online from 2017. We are pricing in delays and setbacks given the scope and scale, but nonetheless we expect the start of Khazzan to have significant impact on Oman's increasingly tight gas supply demand picture. Longer-term upside comes from exploration activity focused on tight and sour gas, as well as offshore and increased onshore activity.

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