Meed | Oman diversifies hydrocarbons value chain

Oman diversifies hydrocarbons value chain

17 December 2023

Oman’s efforts to diversify its hydrocarbons value chain and derive more economic benefits from it are gaining traction.

State energy conglomerate OQ is pushing ahead with oil and gas projects aligned with its Oman Vision 2040 goals of achieving energy security, increasing revenues for the sultanate, and expanding its business portfolio into new energy frontiers such as hydrogen.

Oman aims to become a leading green hydrogen hub, producing 1 million tonnes a year (t/y) of green hydrogen by 2030 and 8.5 million t/y by 2050. Achieving this will require a total capital expenditure budget of $140bn, with a further investment of $230bn to unlock the hydrogen export economy.

While Muscat takes steps to establish a thriving green hydrogen ecosystem, OQ and its partners are also moving forward with plans to realise the sultanate’s blue hydrogen potential.

Hydrogen foray

OQ Gas Networks (OQGN), a subsidiary of OQ, is understood to be making progress with a project to build a cross-country hydrogen transport pipeline network, following its initial public offering (IPO) and listing on the Muscat Stock Exchange in October.

“While most discussion surrounds green hydrogen, there is also the potential for blue hydrogen production … which would provide additional long-term support to gas flows through the natural gas transportation network (NGTN) and is increasingly likely given the probable surplus upstream gas capacity,” OQGN said in its IPO prospectus.

“Blending hydrogen into gas streams could be an interim strategy to kickstart hydrogen production before demand is sufficient to justify investments in dedicated hydrogen pipelines,” the company added.

To that end, OQGN commissioned a feasibility study in 2022 to assess how much hydrogen could be introduced into the NGTN “before adverse effects would be noticeable and too expensive to mitigate”.

The company is understood to have advanced the study in 2023, and is expected to firm up the project’s engineering, procurement and construction tendering schedule in 2024.

OQGN also signed a memorandum of understanding with Belgium-based energy infrastructure company Fluxys International in October to jointly explore cooperation in developing hydrogen and carbon-capture projects in Oman.

Separately, the UK/Dutch Shell is studying the prospect of establishing a blue hydrogen and blue ammonia production facility in Oman, according to a local media report.

The company is considering Duqm, located in the southeast of the sultanate on its Arabian Sea coastline, as the location for the proposed project.

Shell is understood to be collaborating with the majority state-owned Petroleum Development Oman (PDO) for the planned blue hydrogen and blue ammonia production complex.

Through the project, Shell intends to tap into the recovery and storage of carbon dioxide discharged from its operations, while PDO plans to produce blue hydrogen.

Oman’s Energy & Minerals Ministry is supporting Shell in its study of the technical and commercial feasibility of the project, according to the report.

Raising upstream capacity

Maintaining oil and gas production capacity in the long term continues to be a priority for Oman.

In November, OQ awarded Canada-based Enerflex the main contract for a project to expand the production potential of the Bisat oil field in the sultanate. Enerflex will undertake the project, estimated to be valued at $200m, on a design, build, own, operate and maintain (DBOOM) basis.

The project represents the latest expansion phase of the Bisat oil field, situated in central Oman’s Block 60 hydrocarbons concession. Discovered in 2017, the Bisat oil field consists of about 165 oil wells and three crude oil processing plants.

The first crude oil processing plant at the field started operations in August 2019 and the second began running in September 2021. The third plant was commissioned on a trial basis in November 2022.

OQ raised production at the Bisat oil field from 5,000 barrels a day (b/d) in 2019 to 55,000 b/d by the third quarter of 2022. This is understood to be the fastest annual growth in oil field production in the Middle East.

In January 2023, OQ announced that the Bisat oil field development had attained a production milestone of 60,000 b/d.

Gas production project

The majority state-owned PDO is preparing to issue the main tender for a project to build an integrated facility to produce gas from the Budour and Tayseer fields in 2024.

The project aims to expand the capacity of the existing gas production and processing facility at Tayseer. It represents the second development phase of the gas field. PDO also seeks to appraise, produce and process sweet gas from the Budour field, about 50 kilometres west of the Tayseer field.

PDO intends to appoint a contractor to deliver the combined Budour-Tayseer sour gas processing facility project on a DBOOM basis. It is projected to have a capacity of 78.39 million cubic feet a day (cf/d) and 1,167 cubic metres a day (cm/d) of unstabilised condensate.

The facility will handle gas exports of about 70 million cf/d and stabilised condensate exports of 950 cm/d, with a water handling capacity of 340 cm/d.

MEED's January 2024 special report on Oman also includes:

> ECONOMY: Muscat performs tricky budget balancing act
> BANKING: Omani banks look to projects for growth
> POWER & WATER: Oman expands grid connectivity

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Indrajit Sen

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Saudi Arabia raises electricity tariffs
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Saudi Energy, formerly Saudi Electricity Company, has announced revised electricity tariffs, which will take effect on 1 January 2027.

The revised tariff schedule, published on the company’s official website, covers residential, commercial, industrial, agricultural, charitable and government customers.

The largest percentage increase in consumption rates is 16.7%, for residential customers using up to 6,000 kilowatt-hours (kWh) a month. Residential customers will pay 21 halalas/kWh for monthly consumption of up to 6,000kWh, up from 18 halalas. For consumption above 6,000kWh, the rate will rise from 30 to 33 halalas/kWh, a 10% increase.

The industrial tariff will increase by 15%, from 20 to 23 halalas/kWh. Commercial customers, private healthcare facilities and private educational facilities will pay 25 halalas/kWh, up from 22 halalas, for consumption up to 6,000kWh a month, and 35 halalas/kWh above that level, up from 32 halalas.

Tariffs for charities and government customers will also increase. In addition to consumption-based charges, customers will pay a fixed monthly fee based on the capacity of their electricity meter. This replaces the previous separate charge for meter reading, maintenance and billing, with VAT applied to the revised tariffs.

Electricity investment

The new tariffs coincide with changes to water consumption tariffs announced by the National Water Company, also effective from 1 January 2027.

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The tariff changes come as Saudi Arabia plans substantial investment in its electricity infrastructure. In September 2025, Saudi Energy announced plans to invest SR220bn ($58.7bn) in power infrastructure projects between 2025 and 2030.

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Dubai Municipality confirms AED3bn Tasreef drainage awards
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Dubai Municipality has confirmed it has awarded four contracts worth AED3bn ($817m) to expand the emirate’s stormwater drainage network by about 100 square kilometres under phase three of the Tasreef programme.

The projects will cover Jumeirah, Umm Suqeim, Al-Quoz, Al-Barsha, Al-Wasl and Al-Marmoom. The works include constructing and extending main stormwater drainage lines with diameters of up to three metres.

The four packages are part of Dubai’s AED30bn Tasreef programme, which aims to increase the emirate’s stormwater drainage capacity by 700% and reduce costs associated with pumping stations, network operations and maintenance by 20%.

The contracts have been awarded to China State Construction Engineering Corporation (CSCEC) and three local firms: Arifco Group, Nael Construction & Contracting (NCC) and Detech Contracting. Dubai Municipality did not state which projects the awards relate to.

According to sources, the contract awards include packages TF-15-C1, TF-15-C2 and TF-13-C1.

The first package, TF-15-C1, involves the construction of 21 kilometres of main and secondary drainage lines along Al-Wasl Road and in surrounding areas. It will cover Za’abeel 2, Al-Wasl, Jumeirah 1 and 2, Al-Bada’a, Al-Satwa and Dubai World Trade Centre. The estimated $100m contract was awarded to Detech in July, as exclusively reported by MEED.

The second package, TF-15-C2, covers the corridor between Sheikh Zayed Road and Al-Khail Road. It includes about 14km of main drainage lines serving Al-Quoz Industrial Areas 1, 3 and 4, and Al-Barsha 1. In July, MEED reported that CSCEC had won the engineering, procurement and construction contract for this project.

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The final package covers Jumeirah and Umm Suqeim, where about 42km of main drainage lines will serve Umm Suqeim 1, 2 and 3; Umm Al-Sheif; Jumeirah 3; Al-Safa 1 and 2; and Al-Manara.

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Nakheel awards $259m Dubai Islands buildings contract
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Phase four includes 257 homes across four buildings, with completion targeted for the second quarter of 2029.

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Saudi Arabia’s Sports Ministry has tendered a contract covering early works at King Salman International Stadium in Riyadh.

The scope includes enabling works, site preparation and initial construction activities.

The tender was issued on 11 October, with a submission deadline of 19 November.

The stadium will cover about 660,000 square metres (sq m) and seat 92,000. Facilities will include a 150-seat royal suite, 120 hospitality suites, 300 VIP seats and 2,200 dignitary seats.

The wider development will include sports facilities covering more than 360,000 sq m, including two training fields and fan zones; a closed sports hall; an Olympic-sized swimming pool; an athletics track; and outdoor courts for volleyball, basketball and padel.

The stadium is set to host the final of the 2034 Fifa World Cup and will serve as the Saudi national football team’s main base.

US-based architectural firm Populous is the lead architect for the stadium.

Construction of the stadium is expected to be completed by 2029.

The stadium will be located next to King Abdulaziz Park.

Firms submitted prequalification statements for the main design-and-build contract in February.

Saudi stadium plans

In August 2024, MEED reported that Saudi Arabia planned to build 11 new stadiums and refurbish four facilities for the 2034 Fifa World Cup.

Eight stadiums will be located in Riyadh, four in Jeddah and one each in Al-Khobar, Abha and Neom.

A further 10 cities will host training bases: Al-Baha, Jazan, Taif, Medina, Alula, Umluj, Tabuk, Hail, Al-Ahsa and Buraidah.

There are expected to be 134 training sites in the kingdom, including 61 existing facilities and 73 new venues.

Saudi Arabia was officially selected to host the 2034 Fifa World Cup during an online convention of Fifa member associations at the Fifa Congress on 11 December 2024.

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