The Iranian oil ministry announced a deal had been signed to supply gas to the sultanate, in a move that could be welcomed by Oman's industry that has been asking for additional gas.
Announced on the ministry's website and reported by the country's state news agency, Iran's deputy oil minister Javad Oji said his country will start exporting gas through an undersea pipeline by March 2012.
The official, who is also managing director of the National Iranian Gas Co, said the gas will flow through the country's south-eastern province of Sistan-Baluchestan to the Iran-Pakistan border, from where another pipeline will transport it to Oman.
Declining to comment on the deal, a senior oil and gas official told Muscat Daily that if the reports of the deal are correct then the gas would help fuel the sultanate's industrial growth. "We do need a lot of gas for the many new industries that are coming up in Sohar and Duqm. And projects and factories that are already operating will need to expand, so whatever extra gas we can get would be very much welcome, if the price is right.
"According to the last negotiations the price was untenable, which is why negotiations stopped," the official added.
Companies in Sohar have long been expressing the need for increased gas supply. Recently, Sohar Aluminium chief executive Henk Paew said that the company was willing to take up a mega expansion plan worth US$3bn only if it gets adequate natural gas from the government. He said that the company has requested the Oman government for more natural gas and the government would do something about it by November, 2011.
The restricted allocation of natural gas to companies has also forced companies like National Gas Co to venture outside Oman to grow its business.
Earlier in 2009, Oman and Iran signed a deal to jointly develop a 200km underwater pipeline from Iran to Musandam and Sohar.
Iran, which sits on the world's second largest reserves of both oil and gas plans to invest US$15.8bn for the development of the untapped phases of the South Pars gas field, US$4.5bn for joint oil fields, US$3.7bn for domestic oil fields, and US$6.5bn for other domestic gas fields.
The country is also seeking to position itself as a transit route for oil and gas from central Asia. Iran also announced plans to invest around US$40bn in the oil and gas sector in 2011. The country has the world's second-largest crude reserves after Saudi Arabia and the second-largest gas reserves after Russia.
Iran also plans to become a major liquefied natural gas (LNG) supplier, and is aiming to produce 70mn tonnes of LNG by 2015. Iran is expected to export its first cargo of LNG in 2013.
© Muscat Daily 2011
