Reviving the Iranian-Omani gas pipeline after being suspended for two decades - Energy

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  • • The Sultanate of Oman is looking to benefit from Iran’s natural gas reserves.
  • • Oman seeks to feed energy-intensive industries and LNG export terminals.
  • • The Sultanate of Oman was recently able to stimulate its exports of liquefied natural gas.
  • • Iran’s export of oil and gas to neighboring countries will help solve its problems.
  • • The expected maximum capacity of the Iranian-Omani pipeline is 1.5 billion cubic feet of gas.

Iranian Oil Minister Javad Oji announced the revival of the Iranian-Omani gas pipeline project, during his visit to the Sultanate of Oman, which began on Friday, May 20, and his meeting with Omani Energy Minister Muhammad al-Ramahi, after the pipeline was suspended for nearly two decades.

The Sultanate of Oman is looking to benefit from Iran’s natural gas reserves, hoping to feed energy-intensive industries and liquefied natural gas export terminals.

The Iranian news agency reported that the approval to revive the Iranian-Omani gas pipeline project was made during Oji’s visit to the Sultanate before an official visit by Iranian President Ibrahim Raisi to the Sultanate of Oman on Monday, May 23, Reuters reported.

Gas pipeline project start

In 2013, the two countries signed a $60 billion, 25-year agreement under which Iran would supply gas to Oman via an offshore pipeline. The two countries renewed their efforts to implement this project in 2016.

Iran-Oman gas pipeline
The Minister of Energy and Minerals of the Sultanate of Oman, Mohammed Al-Ramahi

In 2017, Iran announced that it had agreed with the Sultanate of Oman to change the route of the planned pipeline to avoid passing in the territorial waters of the United Arab Emirates.

The project was later postponed due to differences over pricing and US pressure on Oman to find other suppliers.

The United States reimposed sanctions on Tehran in 2018, after it withdrew from the 2015 nuclear deal between world powers and Iran.

Iran-Oman gas pipeline

The Iran-Oman gas pipeline extends from Rodan County to the port of Kombark in Iran and then underwater to the port of Sohar in the Sultanate of Oman.

The pipeline is owned by the Iranian Ministry of Oil and operated by the National Iranian Gas Export Company, and has a capacity of 1,000 million cubic feet per day, while the proposed capacity is 1.5 billion cubic feet per day, according to the US Global Energy Monitor website.

The corporation estimated the length of the Iranian-Omani gas pipeline to be about 400 kilometers, and its financing at $1.2 billion. One of the projects associated with the pipeline is the Qalhat LNG terminal in Oman.

The Iranian-Omani gas pipeline includes an onshore section that began construction in 1994. The National Iranian Gas Export Company attributes the delay in building the offshore part of the pipeline to the sanctions imposed on the country.

In April 2018, a team from Oman and Iran met to finalize the track. Officials with “Offshore Installations” expected that construction will take 3 years.

In November 2018, the Iranian Ministry of Environment approved the pipeline plan. In May 2021, Minister of Energy and Minerals Mohammed bin Hamad al-Ramahi reiterated his country’s intention to revive the project.

Pipeline project study

A report said that studies of an offshore pipeline to transport 20 million cubic meters of Iranian gas per day to the Sultanate of Oman for 25 years will be completed within 6 months, according to a website published by the Bahraini daily, “Gulf Daily News” on February 24, 2016.

The Muscat Daily newspaper, citing media reports, stated that an Iranian delegation will visit Oman soon to discuss the price of gas and other issues related to the $60 billion project.

Iranian gas to Iraq
Iran’s flag appears on top of a gas field – photo (ifp)

Iran Offshore Engineering and Construction Company (IOEC) has completed the draft report of the proposed gas pipeline project between Iran and Oman.

The 400-kilometre pipeline is expected to pump 28 million cubic meters of gas for 15 years from Iran to Oman, the Oman Observer reported, citing the terms of the 2013 agreement between the two countries on the gas pipeline project.

The pipeline will extend 200 km over land, while the offshore section between Iran and the port of Sohar in Oman will extend for another 200 km, Trade Arabia published on March 31, 2016.

Omani aspirations

Oman’s Minister of Energy and Minerals, Mohammed al-Ramahi, told Standard & Poor’s Global Platts that Oman would like to revive plans to import Iranian gas via a pipeline in the event of a re-deal of the nuclear deal, and is also considering expanding its pipeline network to Yemen.

Al Ramahi said: There are many opportunities to make good use of this project from Oman’s point of view, as published by Standard & Poor’s Global Platts on May 17, 2021.

In 2016, senior officials from the state-owned National Iranian Gas Export Company met with the Omani Ministry of Oil and 3 international oil companies: Shell, Total and Korea Gas Corp., to explore the possibility of transporting gas from Iran to Oman.

This followed a 2013 agreement between the two countries to develop a 15-year gas export plan via an offshore pipeline.

The proposed pipeline at the time had the capacity to transport 1 billion cubic feet per day of Iranian natural gas to Oman.

These plans were halted when former US President Donald Trump withdrew the United States from the Joint Comprehensive Plan of Action, also known as the Iran nuclear deal, in May 2018, and reimposed sanctions on Iran.

Iran-Oman gas pipeline
Map showing the Iranian-Omani gas pipeline (in red)

Under US President Joe Biden, the two sides began indirect talks in Vienna with the aim of restoring the agreement.

Al Ramahi said he is watching the talks closely but wants to make sure that if the JCPOA comes back into effect, it is permanent and not subject to any political conflict in the future.

He added that his country could benefit greatly from the gas, if the supply was stable and guaranteed, with no threats of future sanctions.

He explained that the first question people ask is what if President Trump, after President Biden, came back and canceled the agreement again. He called for caution about what kind of agreement had been reached this time.

Oman consumed 775 billion cubic feet per day of natural gas in 2017, according to the US Energy Information Administration.

The country has been in surplus since September 2017, when the BP-operated Khazzan gas field came into operation and production rapidly increased to 1 billion cubic feet per day.

help yemen

The proposed Iran-Oman gas pipeline would extend from Iran’s giant South Pars gas field to the port of Sohar in northern Oman, with the current pipeline extending to Salalah near the Yemeni border.

Ideally, Oman’s Minister of Energy and Minerals, Mohammed al-Ramahi, said the pipeline could then be extended to Yemen. Noting that gas is needed in a country like Yemen to start the transition from conflict to creating industries and opportunities for their people.

He explained that, at the present time, there is little demand for gas in Yemen, the poorest country in the Arab world, due to its incomplete infrastructure and the devastation caused by a civil war that lasted for many years.

Natural gas consumption today is about 10-11% from its peak in 2014, which saw demand reach 0.15 billion cubic feet per day, according to analysis by S&P Global Platts Analytics.

There is a question about the additional demand that will be unlocked in Yemen as a lot of gas demand is latent because the performance in the electricity generation and fuel supply sector is low, said Mark Mozor, lead analyst for demand models at Platts Analytics.

He showed that, in theory, the pipeline could open additional demand in both of these sectors.

LNG and hydrogen plans

hydrogen transport

Oman’s Minister of Energy and Minerals, Muhammad al-Ramahi, said that in addition to re-exporting Iranian gas to Yemen, Oman will look to benefit from some of it in industry, increase its capacity to produce liquefied natural gas and petrochemicals, and possibly delve into the hydrogen industry.

Oman has recently been able to stimulate its LNG exports through the development of the Khazzan field, one of the few examples of successful employment of US shale drilling technologies in the Middle East.

Omani LNG exports witnessed a phase of activity at full capacity between 2018-2020, when they averaged about 12 billion cubic meters / year.

Over the past 24 months, Oman has conducted de-strangulation operations at its Omani LNG facility, which will allow Omani LNG exports to expand by about 2 billion cubic meters/year.

Platts Analytics expects Oman’s LNG exports to reach 14 billion cubic meters/year over the next 5 years.

Al-Ramahi said that the Sultanate of Oman can produce liquefied natural gas very quickly, noting that it is feasible, today, to use gas to produce blue hydrogen.

He hinted that this trend will open a new opportunity for the Iranians to manufacture hydrogen; And that the two countries can do things like that together.

Connect Iran to the world

To meet its growing energy needs, Oman is looking to increase its supply of natural gas above the current levels of imports from Qatar via the Dolphin Pipeline.

This came in an article entitled “Does the Iranian-Omani Gas Pipeline Connect Iran to the World?” For energy expert Dr. Umud Shoukry, and it was published on the website of the American “Inside Arabia” magazine, on December 28, 2018.

Dr. Umud Shoukry noted that while Oman exports large quantities of natural gas from its LNG facilities, it has had to allocate large quantities of its production to local demand.

He added that Iran, which has the second largest reserves of natural gas in the world, has plans to increase its exports of natural gas to other countries.

Iran-Oman gas pipeline

He said that despite this main advantage, Iran’s share, at the present time, is less than 1% of the world’s natural gas market.

He stressed that exporting natural gas to its neighbors is one of Iran’s priorities in the future, as Iran’s export of oil and gas to its neighbors will help the countries of the region to solve their problems and promote peace and stability in the region.

He indicated that the Iranian-Omani natural gas pipeline will provide Iran with a great opportunity to export gas to Oman, as well as to other countries.

The need for a natural gas line

Natural gas consumption in Oman more than doubled in the previous decade to 2016.

In recognition of Oman’s growing demand, in 2013, Iran and Oman signed a Memorandum of Understanding to build a new pipeline to export Iranian natural gas directly across the Gulf to Oman.

The $25 billion agreement pledged to supply Oman with gas by building an offshore pipeline. While construction of the pipeline was subsequently halted, the project now has a new deadline for completion hopefully by 2020.

The expected maximum capacity of the Iran-Oman pipeline is 1.5 billion cubic feet of gas to be pumped to Oman per day.

The Iran-Oman pipeline will transport some of the gas for processing at the Anjowi processing plant, before sending it to target markets in Oman, while the remaining pipeline capacity will be allocated to future markets in the Gulf.

Shipping to East Asia and Europe

Energy expert Dr. Umud Shoukry expected part of the gas that will be transported through the pipeline to be converted into liquefied natural gas to be shipped to target markets in East Asia and Europe.

He added that the remaining pipeline capacity will be allocated to future markets in the Gulf states.

The project, which has long been anticipated, is estimated to cost $1.2 billion, with initial quantities of 30 million cubic feet per day of natural gas to be transported from the Iranian port of Koh Mubarak to the Omani port of Sohar.

It is worth noting that Iranian companies do not have the expertise to install pipelines in waters deeper than 1,000 meters, which makes the participation of an international partner essential to the success of the project, according to Dr. Umud Shoukry.

Dr. Umud Shoukry said that, as of 2014, Oman imported about 73 billion cubic feet of natural gas from Qatar via the Dolphin pipeline, which runs from Qatar to Oman via the United Arab Emirates.

He stressed that the Sultanate of Oman planned to phase out these imports when the first phase of the Khazzan gas field, operated by the British company BP, was commissioned, and production began in 2017.

The Khazzan field began operations in the fourth quarter of 2017, and it is still too early to know how this will affect Oman’s imports in the long term.

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