New Oman-Iran gas pipeline route

MUSCAT, August 11, 2016 – Omani Minister of Oil and Gas Mohammed bin Hamad al Rumhy on Wednesday said the sultanate and Iran had decided to alter the route of the planned subsea gas pipeline between the two countries to avoid the territorial waters of the United Arab Emirates.

According to Al Rumhy, the pipeline’s new route will also mean laying it at greater depths. “Instead of the shallower option at around 300 metres deep, the pipeline is to plunge close to 1,000 metres below the sea’s surface. And it will be slightly shorter,” he said.

The pipeline project is currently in the design state and is expected to go up for bid by year-end 2016. “Oman has started talking to Japanese, Korean and Chinese parties to raise finance. And this option has been received very well,” Al Rumhy also said, adding that the projected construction time would be two years, assuming gas prices stay at a reasonable level. “I am not optimistic about the future of oil and gas prices, and we have an understanding with our partners that the market is not very encouraging,” the minister commented.

Al Rumhy also weighed in on the planned OPEC meeting in Algeria in September, saying the country saw no “point of continuing to be part” of the event. “There were hopes of seeing the impact of fewer investments in oil and gas, and less exploration, on supply and demand with hopes that this might affect the low oil prices. But that didn’t happen, and there has been no positive impact on oil prices,” he told Reuters.

Currently, Oman produces close to 1 million bopd. However, with the addition of new refining capacity in Sohar in early 2017, output is expected to be affected, Al Rumhy said. “It will take an additional 70 to 90,000 bpd. And with the increase in Oman’s average oil production to exceed a million bpd, we expect the drop in our oil exports to be 50,000 bpd compared to last year,” he was quoted as saying.

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