MAY 13, 2023

Oman LNG eyes expansion of Qalhat plant capacity

Buoyed by a slew of recent commitments to offtake its LNG output, Oman LNG plans to achieve a further incremental expansion of the capacity of its gas liquefaction complex in Qalhat — a move that also bodes well for its efforts to secure an extension of its concession to operate beyond its current mandate expiring in 2024.

Oman LNG CEO Hamad al Numani said the capacity boost is designed to lift output from the 3-train LNG plant to 12 million tonnes per year (tpy), up from 11.5 million tpy presently.

The uptick will further strengthen the majority government-owned company’s positioning in a global energy market still roiled by the effects of a gas supply crisis triggered by the Russian-Ukrainian conflict, he noted.

Significantly, the proposed expansion comes on top of a series of upgrades that have helped bolster plant capacity by around 33 per cent over the past couple of years.

“The total production of LNG from our Qalhat facility grew from 8.6 million tpy in 2017 to 11.5 million tpy in 2022,” he said.
“Recently we completed a debottlenecking project: the target was to increase production by 10 per cent and we have exceeded this target below the budget initially allocated for this growth project, and we were timely in the market. It was a success considering that it came at the right moment given the global energy crisis and we basically had an ‘extra’ 1 million tonnes to leverage,” Al Numani told The Energy Year, a UK-based energy-centric news portal.

Next in its sights is a capacity ramp-up to 12 million tpy of production — a goal Oman LNG seeks to achieve within a “year or two”, side-by-side with its efforts to secure a government mandate to operate well into the foreseeable future.

“Currently we are working to present to the government and the shareholders a second phase of growth with viable options to continue our success story, and ensure we continue to be a major player in this industry,” the CEO further noted in the interview.
Over the last six months, Oman LNG has signed a succession of offtake agreements with a number of international offtakers, effectively guaranteeing the Qalhat plant a ‘life extension’ beyond 2024. Most of these supply commitments, ranging from 800,000 tpy to 1 million tpy, cover contracts of up to ten years starting from 2025.

Offtakers include France’s TotalEnergies, Thailand’s PTTEP, China’s Unipec, Turkey’s BotaƟ and Shell International Trading Middle East.

Also on board are four key Japanese partners: JERA, Mitsui, Itochu and Kansai Electric, he added.
In the Asian region, Oman LNG will remain focused on China, Japan and South Korea as promising markets.
A long-term supply contract with KOGAS of Korea, for a sizable 4.1 million tpy, concludes in 2023, he said.

“India is also a growing market and we have expanded our foothold into Europe, a very interesting structure because of its multiple entry points —through Italy, Turkey or the Netherlands,” the CEO added.