CAPITAL: Muscat

MONETARY UNIT: Omani Riyal

REFINING CAPACITY: 85,000 b/cd

OIL PRODUCTION: 895,000 b/d

OIL RESERVES: 5.238 billion bbl

GAS RESERVES: 27.45 tcf

A liquefied natural gas export project under way in 1997 was the largest single project ever put together in Oman.

LNG production was to start in first quarter 2000 from a plant at Qalhat, 125 miles southeast of Muscat and just south of Sur.

The liquefaction plant will have dry gas inlet capacity of 34 million standard cu m/day and LNG capacity of 6.6 million metric tons/year rundown into storage from two trains of equal size. Two storage units at the site each will have capacity of 120,000 cu m.

The liquefaction plant will use a propane-precooled, mixed-refrigerant process.

GAS will come from 60-70 wells in Saih Rawl, Saih Nihayda, and Barik fields, gathered at Barik. First phase development involves 31 wells.

Energy content of the gas is 1,100-1,145 BTU/scf. The gas is 82-86.5% methane, 6-7.7% ethane, 2.2-3.3% propane, and 1.2-1.85% butane. It contains maximum levels of 0.76% pentanes and heavier, 5 ppm hydrogen sulfide, 1.2% carbon dioxide, 3.4% nitrogen, and 0.05% helium.

A new gas processing complex at Saih Rawl will use low temperature separation to extract as much as 25,000 cu m/day of condensate and 110 metric tons/day of liquid petroleum gas fractionated on site. Dry gas outlet capacity will be 40 million cu m/day.

A new 45-km, 16-in. pipeline will carry liquids to a connection with Oman`s main oil pipeline at Qarn Alam.

Dry gas from Saih Rawl will flow through a 356-km, 48-in. pipeline to the liquefaction plant. The pipeline follows a northward route around the environmentally sensitive Wahiba Sands. Most of the line will be buried in a flat sand gravel plain.

The line will have no compression stations at first, although plans include a provision for future installation of a station at the pipeline`s midpoint.

Oman`s Ministry of Petroleum & Minerals estimated cost of the project at $4 billion, divided equally between the up- stream and downstream parts.

Oman LNG LLC, a joint venture of the government (51%) and private shareholders led by Royal Dutch/Shell Group with a 30% share, was building and will operate the liquefaction plant, raise financing, and handle transportation and sale of LNG. Downstream financing is to be 80% commercial bank loans and 20% equity.

The downstream construction contractor group included Chiyoda-Foster Wheeler Co. LCC, Suhail Bahwan Establishment, and Zubair Enterprises. The group holds a $1 billion engineering, procurement, and construction contract.

Petroleum Development Oman, owned 60% by the government and including a 34% interest of Shell, will build and operate the upstream production facilities on behalf of the government. PDO`s private shareholders were financing the upstream investment.

A joint venture of Snamprogetti, Bechtel, and local contractor Galfar holds the engineering, procurement, and construction contract for upstream facilities.

South Korea Gas Corp. signed a 25 year fob contract to buy 2 million tons of LNG in 2000 and 4.1 million tons/year from 2001 on. Oman LNG during 1997 was negotiating a cif contract with Petroleum Authority of Thailand for 2 million tons/year beginning in 2003.

Upstream activity

Exploration in Oman picked up steam during 1997.

A unit of Calgary`s Arakis Energy Corp. spudded a wildcat on its Block 15 concession in Oman at midyear and added two partners in the venture.

Calgary-based Odyssey Petroleum Corp. said it paid $1 million to acquire a 10% working interest in Oman`s Jebel Aswad Block 15, where operator Conquest Exploration Oman Inc., a unit of Arakis, spudded the 1 Wadi Saylah exploratory well on Apr. 25, 1997. The other new partner, with an undisclosed interest, was Bow Valley Energy Ltd., Calgary.

Arakis said the new partners will carry a "significant" part of costs to drill the well, enabling them to earn an interest in the concession equal to half their percentage participation in the well.

Block 15 covers 346,000 acres, 30-50 miles northeast of a group of fields including Fahud, Yibal, Natih, and Lekhwair, which have combined total crude output so far of about 22 million bbl. The fields all produce from Cretaceous Natih.

The 1 Wadi Saylah wildcat well targeted a new structure in the Natih formation at 9,400 ft and was expected to reach 11,315 ft TD. It was one of 11 structures mapped on the concession.

The operator hoped mainly to find light oil from the Natih formation at 9,400 ft and, secondarily, natural gas and condensate from the Shuaiba formation at 10,865 ft.

If a commercial find is indicated, initial plans call for an early production scheme and movement to market via truck, Odyssey said.