This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS MUSCAT 000577 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR NEA/ARPI, EB/ESC/IEC/EPC 
 
E.O. 12958: N/A 
TAGS: EPET ECON EINV ETRD MU
SUBJECT: CONFERENCE SPOTLIGHTS OMAN'S ENERGY CHALLENGES 
 
REF: 05 MUSCAT 1673 
 
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SUMMARY 
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¶1. At the Muscat-hosted 2006 Oil and Gas West Asia Exhibition 
and Conference on April 9, Omani government and oil company 
officials focused remarks on meeting Oman's energy needs and 
oil production challenges through increased investment in 
technology and human resources.  Meanwhile, the Dolphin 
Project remains on track to deliver gas to Oman in 2008, 
transforming Oman from a net supplier to net consumer.  End 
Summary. 
 
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INVESTMENT NEEDED 
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¶2. On April 9, Dr. Mohammed bin Hamad bin Saif al-Rumhy, 
Oman's Minister of Oil and Gas, outlined the challenges and 
opportunities facing Oman's petroleum sector during the 
opening session of the 2006 Oil and Gas West Asia Exhibition 
and Conference in Muscat. Rumhy projected robust growth in 
future demand, citing estimates that today's consumption rate 
of 84 million barrels per day (bpd) would grow to 138 million 
bpd by 2030.  Rumhy expressed concern that the world's 
largest oil fields accounted for only 3% of the approximately 
4,000 active fields, but produced over 50% of the supply.  He 
remarked that $500 billion would need to be invested in the 
Middle East alone to keep oil production at current levels. 
To this end, Rumhy stated that the Omani government has 
allocated $10 billion for investment in enhanced oil recovery 
(EOR) operations over the next five years, and has awarded 
the final onshore production concessions, though some 
offshore blocks remain open.  Rumhy also stressed the 
importance of investment in human resources to uncovering new 
reserves. 
 
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HEEDING THE CALL 
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¶3. John Malcolm, Managing Director of Petroleum Development 
Oman (PDO), and Glenn Vangolenn, General Manager of 
U.S.-based Occidental Petroleum (Oxy), echoed Rumhy's view 
that the upcoming challenges will provide opportunities for 
exploration companies.  Malcolm noted that PDO (the majority 
government-owned oil company that is by far Oman's single 
largest producer) has turned more aggressively to enhanced 
oil recovery (EOR) techniques to stem recent production 
declines.  He forecasted PDO introducing one EOR project per 
year, up from one every two to three years.  Vangolenn 
outlined Oxy's aggressive Oman expansion plans by reaffirming 
his company's goal of producing 150,000 bpd from its Block 53 
Mukhaizna field (acquired in 2005 from PDO) by 2011, 
announcing the start of production from its Block 27 field by 
the 3rd quarter of 2006, and highlighting its recent 
acquisition of the Block 54 field.  Oxy is currently Oman's 
second-largest producer of oil.  Both company executives also 
stressed human resources investment as a priority. 
 
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SECURING MORE GAS 
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¶4.  Ibrahim al-Ansari, Executive Vice President (Operations) 
for Dolphin Energy, reviewed the status of the Dolphin Gas 
project, which is expected to deliver almost 2 billion 
standard cubic feet (scf) per day from offshore Qatar to Oman 
and the UAE.  Oman Oil Company has contracted with Dolphin 
for 200 million scf per day, much of it to fuel Oman's 
industrialization of Sohar.  The upcoming contract, to begin 
in early 2008, represents a reversal of roles, as Oman Oil 
currently supplies Dolphin with 135 million scf per day for 
power and water plants in Fujairah. 
GRAPPO