MUSCAT - Leading Omani LPG distributor National Gas Company has taken a significant step towards realising its proposed mini-liquefied natural gas (LNG) project in Oman, signing a Memorandum of Understanding (MoU) with Abraj Energy Services to collaborate on the initiative aimed at decarbonising oilfield operations.

As an initial step, the two companies will jointly implement a pilot project to evaluate the use of cleaner fuels as a substitute for diesel in generators powering drilling rigs and other oilfield installations.

“The objective of the pilot is to assess the technical feasibility, operational performance, safety parameters and commercial viability of the proposed alternate energy solution”, said Dr Rachid Majjad, CEO of National Gas. “Data and operational outcomes generated from the pilot will be evaluated to determine the feasibility of establishing an LNG plant for long-term implementation, subject to satisfactory technical and safety results”, he said in a filing to the Muscat Stock Exchange on Tuesday, May 19, 2026.

The MoU, signed on the sidelines of the Oman Petroleum & Energy Show, advances a proposal first unveiled earlier this year under which National Gas is evaluating investments of around $100 million in the development of a small-scale LNG production facility in the Sultanate of Oman. If realised, the venture would mark a major diversification for the publicly traded company, whose current portfolio is centred on LPG distribution and related energy solutions, including synthetic natural gas (SNG) systems.

Speaking earlier to UK-based energy publication The Energy Year, Dr Majjad said the project envisages converting diesel-powered generators at Abraj’s rig sites into dual-fuel systems operating on LNG. The conversion is expected to lower carbon dioxide emissions by around 30 per cent while reducing operating costs by approximately 15 per cent.

“We plan to invest $100 million to build our own LNG production facility”, Majjad said. “It will source gas from OQ, liquefy it and distribute it to rig sites. Since rigs change locations, the regasification units, cryogenic tankers and associated equipment will all be mobile”. 

He added that Abraj — which controls around half of Oman’s rig market — is expected to serve as the anchor off-taker for the project, with an initial target of supplying around 85 rigs.

In Tuesday’s filing, Majjad emphasised that the pilot project aligns with Oman’s sustainability agenda and national decarbonisation objectives. “The pilot project forms part of both parties’ initiatives to support sustainability and reduce carbon dioxide (CO₂) emissions, in alignment with the Sultanate of Oman’s strategic objective and national initiatives towards achieving net-zero carbon emissions by 2040”, he noted.

He stressed, however, that the MoU relates solely to the pilot phase and does not constitute a binding commitment by either party to proceed with the LNG plant or associated investments.

Should the project eventually prove commercially viable, the mini-LNG plant would pave the way for the first regular domestic distribution of LNG within Oman. Transported in insulated cryogenic road tankers, LNG could then be supplied to factories, industrial facilities, remote communities, mining operations and power plants across the country.

2026 © All right reserved for Oman Establishment for Press, Publication and Advertising (OEPPA) Provided by SyndiGate Media Inc. (Syndigate.info).