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15 Jun 2020 | 15:43 UTC — Dubai
By Katie McQue
Highlights
Economics of GTL being examined
Decision to be made by end of Q4
Bringing on additional partner not under consideration
Dubai — Plans to build a new gas-to-liquids project in Oman between the government and Shell are under review due to the global economic downturn, the sultanate's oil minister, Mohammed AL-Rumhy, told S&P Global Platts.
"We've decided to revisit the GTL with our partners Shell," said Rumhy in a June 11 interview. "We will see what is best for the project, and this work could take up to three months. So, by the third or fourth quarter, we will make a final investment decision of some kind on the project. We'll see how it goes."
Shell didn't respond to request for comment.
The oil major has been looking at building a GTL plant in Oman that would have a capacity of 40,000-45,000 b/d, and take its feedstock from the Mabrouk North East field discovered in March 2018. The field is thought to hold recoverable reserves of more than 4 Tcf (112 Bcm) and 112 million barrels of condensate, according to semi-state owned Petroleum Development Oman, which discovered the field in its giant Block 6 concession.
Under a memorandum of understanding signed early 2019, Shell and Total committed to developing the upstream block, taking working interests of 75% and 25%, respectively. The objective was to achieve an initial gas production of around 500 MMcf/d and a potential to reach 1 Bcf/d at a later stage. As part of the agreement, Shell was to build the GTL plant and Total a liquefied natural gas bunkering service for vessels calling at Sohar port.
"We are looking at upstream and downstream as a package and see how best to move forward," said Rumhy. "People will look into the FEED [front-end engineering and design] and cost element of it."
Developing GTL projects can prove challenging. For instance, Shell has previously built the 260,000 b/d Pearl GTL project in Qatar. Initially, the project was estimated to cost $5 billion, however, this figure ballooned by the time it was completed in 2012, according to Shell.
Oman and Shell are not considering bringing on another partner to develop the GTL project, Rumhy said.
"Either the project is good, in terms of rate of return for the investors, and we go ahead, or not," Rumhy said. "It's not a question of raising capital, where bringing in a partner would solve that difficulty. It's very simple: Is this a viable project or not under the new conditions? The pandemic has brought up new questions in everything we do."
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