Muscat - Oman's liquefied natural gas (LNG) industry enters a new era on September 1, with the merger of the country's only two LNG companies - Oman LNG and Qalhat LNG.
Unanimously approved by the shareholders of both corporations, today marks the first day of formal functioning of the new unified entity.
The integration capitalises on a number of existing operational efficiencies and potential synergies such as production and export from common facilities at the three-train plant in Sur, one source of gas supply in Petroleum Development Oman, shipping provider in Oman Shipping Co and almost similar destinations of cargoes. It will also take advantage of the combined knowledge of the skilled workforce in the country's LNG industry and offer greater flexibility to deploy a larger portfolio of cargoes and vessels in the global LNG market, a press release said.
The fusion could well bump up revenue accruing to the nation from LNG exports by reducing cost of operations and offering better management of swaps and diversions of cargoes, while maintaining a reliable supply of LNG cargoes to long-term buyers. Enhanced customer focus and care will also be a paramount feature of the new entity.
Analysts are forecasting rising demand for LNG in the coming years, with global demand expected to double from 2012 levels by 2020. Further, natural gas is also expected to replace coal as the second most important source of energy by 2040.
The integration brings together the strengths of the two companies, positioning the new entity to leverage on supply opportunities expected to come with projected growth demand in the global LNG industry. While Oman LNG's business has emphasised the sale of its cargoes through long-term sales and purchase agreements (SPAs), Qalhat LNG is an active and successful player in swaps and diversions of LNG cargoes as well as long-term SPAs.
"The successful integration of Oman LNG and Qalhat LNG, which formally begins today, marks the commencement of a new era for our nation's LNG industry," said the Minister of Oil and Gas and chairman of Oman LNG, H E Dr Mohammed al Rumhi.
"Both companies have a solid track record of achievements in terms of reliable supply of LNG, high revenue generation for the country, contribution to social development and Omanisation. As one solid entity, all stakeholders in the value chain can be assured that even greater value will be generated from the operations in the industry. Oman now has one face for LNG exports to the world and this news has been well received by the global markets," H E Dr Rumhi added.
Oman's LNG industry has grown out of His Majesty Sultan Qaboos bin Said's vision to diversify the economy and has attracted high revenue by harnessing natural gas resources for export as LNG. The country produced its first shipment of LNG in 2000 after the first of an initial two-train plant began operations under Oman LNG, established by His Majesty the Sultan's Royal Decree in 1994. With a third train under Qalhat LNG, LNG has played a greater role in contributing to the national economy as the two companies have worked intensely with outstanding success to drive their organisations forward.
Many say that vision has largely been realised with LNG now the second largest income earner for the sultanate, after oil.
© Muscat Daily 2013
