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Dr Mohammed bin Hamad Al Rumhy, Minister of Oil and Gas and Chairman of Oman LNG
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Muscat: The Sultanate's two prestigious liquefied natural gas companies — Oman LNG and Qalhat LNG — have merged together to make a fully integrated entity with effect from yesterday.
Unanimously approved by the shareholders of both the formerly distinct corporations, the merger marks a new era in Oman's LNG business.
The integration capitalises on a number of existing operational efficiencies and potent synergies such as production and export from common facilities at the three-train plant in Sur, a single source of gas supply in Petroleum Development Oman (PDO), same shipping provider in Oman Shipping Company (OSC) and almost similar destinations of liquefied natural gas cargoes.
It will also take advantage of the combined knowledge of a highly skilled workforce in the country's LNG industry and offer greater flexibility to deploy a larger portfolio of cargoes and vessels in the global liquefied natural gas market.
The fusion could well bump up revenue accruing to the nation from LNG exports by reducing the cost of operations and offering a 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 is also a paramount feature of the integrated entity.
Rising demand
Analysts are forecasting a rising demand for LNG in the coming years (the global demand is expected to double by 2020 compared with 2012).
The integration combines the strengths of the two companies, positioning the new entity to leverage its supply opportunities expected to come with a 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 Dr Mohammed bin Hamad Al Rumhy, Minister of Oil and Gas and Chairman of Oman LNG.
"Both companies have a solid track record of achievements in terms of ensuring a reliable supply of LNG to our valued customers, high revenue generation for the country, contribution to social development and Omanisation of their staff. As one solid entity, all stakeholders in the value chain can rest 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," he added.
Oman's LNG industry is a result of the vision of His Majesty Sultan Qaboos bin Said to diversify the country's economy and has earned high revenue by harnessing the natural gas resources for export as liquefied natural gas. The country produced its first shipment of liquefied natural gas in 2000 after the first of an initial two trains began operations under Oman LNG. With a third train under Qalhat LNG, liquefied natural gas has played an even greater role in contributing to the national economy as the two companies have worked intensely with outstanding success to drive their organisations forward.
The country's vision has largely been realised with liquefied natural gas now the second largest income earner for the Sultanate, after oil revenues. Oman LNG's successful operations led to the incorporation of Qalhat LNG, which was established in 2003. Qalhat LNG's single train made up the third train of a three-train operation with a total nameplate capacity of 10.4 metric tonnes per annum (mtpa) capacity.
Qalhat LNG sent off its own first cargo of liquefied natural gas in December, 2005.
"This is an exciting time for our country's LNG industry and I am happy that this is happening after much careful and thorough planning, and consideration of the shareholders of both the companies. Both Qalhat and Oman LNG stakeholders will derive much more value from the unified, holistic front for liquefied natural gas exports in the new integrated company," said Nasser bin Khamis Al Jashmi, the undersecretary at the Ministry of Oil and Gas and chairman of Qalhat LNG.
With key buyers in Asia and Europe, both companies have run efficiently and reliably since their respective start-up of operations and last year generated a combined pre-tax revenue of over $5 billion. By the end of July this year, Oman exported a combined 1,619 cargoes of LNG.
Beyond its direct contribution to revenue, the country's two LNG companies have been pivotal to social development, executing a myriad of social investment initiatives that led to job creation and entrepreneurship, spread of quality education and health care, encouraged women's development and supported tourism, among other benefits.
The integration promises a strong and robust engagement with the community in Sur, home to the company's plant operations.
"Day One of full integration between Oman LNG and Qalhat LNG is a milestone that heralds the preparedness of the country's LNG industry to remain a key source of stable and reliable supply to all our customers in the gas market, a key source of revenue generation for Oman and its people and a valuable contributor to ensure a sustainable growth for the many communities across Oman that we serve through our many social investment programmes," said Harib Al Kitani, CEO of Oman LNG, the operating name of the new entity. "Today, a new era has begun. An era of marching towards being the best at what we do, combined with achieving excellence in every aspect of the LNG business."
The integrated company, Oman LNG, will operate from its two offices in Muscat — the Qalhat LNG property situated at Airports Heights, Ghala, and the familiar Oman LNG building located in Shatti Al Qurum, from the first day of integration.
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