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Oman signs up for Iranian gas



By Upstream staff 

Iran has signed a deal to export gas to neighbouring Oman - a move which could open up new export routes to the the Islamic republic.

In a statement released late last ngiht, the Iranian Oil Ministry said the agreement would see Iran would export 1 billion cubic feet of gas to Oman, which has an export terminal to make liquefied natural gas.

Iran's efforts to build its own LNG facilities have faced delays, in part because US sanctions on Tehran deter investors and block access to some technology.

Iran currently exports only modest amounts of gas by pipeline.

Omani Commerce & Industry Minister Makboul bin Ali bin Sultan, who signed yesterday's deal with Iranian Oil Minister Kazem Vaziri-Hamaneh, suggested the main aim was to meet Omani needs.

"In future Oman needs a huge amount of gas, so we are negotiating with Iranian officials to buy gas from Iran. The joint cooperation project ... does not include just gas imports but also exploring, extraction and transfer by pipeline to Oman," he was quoted as saying by the Iranian Oil Ministry's news agency Shana.

Analysts say Iran could use Oman as a transit route for its gas, which could be processed at Oman's Qalhat LNG plant. The plant can make just under 10 million tonnes of LNG per year.

"Potentially you could have Iranian gas actually being piped to Oman and then liquefied and sold on international markets," Stuart Lewis, Middle East director at energy consultancy IHS, told Reuters.

The project was in its early stages but there were signs it would move ahead quickly and both sides were looking at finalising the deal in September, Lewis said.

"If you contrast that to all the projects under consideration and haven't come to fruition, this project could be quite significant," he added.

Oman and Iran signed a preliminary gas deal in May. At the time, Oman's official news agency said LNG exports of Iranian gas could be marketed by a joint Omani-Iranian company.

The deal signed last night included developing the Hengam and other fields, Shana said.

Hengam is a joint field, which is known as West Bukha in Oman. It was not clear if the development plans envisaged in the deal covered just Iranian areas of that field or the whole area.

"Before signing the agreement, the two sides agreed on exporting Iran's gas, developing Kish gas field, Oman's investment in Iran's oil and gas fields, including Hengam fields and developing these fields by the Iranian team and establishing a joint investment company," Shana said.

Iran and Oman have been discussing developing the Hengam-Bukha field for years. It holds around 2 trillion cubic feet of gas and lies in the Strait of Hormuz at the mouth of the Gulf between the two countries.


Tuesday, 26 June, 2007, 12:55 GMT  | last updated: Tuesday, 26 June, 2007, 12:55 GMT

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