18/04/2016 07:51 AST
Majority government owned Oman LNG, which operates a three-train natural gas liquefaction plant at Sur, has announced revenues of $2.612 billion for 2015, down from the previous year’s figure of $4.074 billion — a decline attributed primarily to the collapse in international oil and gas prices, as well as a shortfall in LNG production. The slump in revenues was the steepest in the last five years, reflective of the devastating impact that the oil price crash continues to wreak upon energy producing economies, such as Oman. It compares with record high revenues of $4.491 billion achieved in 2013, up from $4.342 billion in 2012, and $3.963 billion in 2011.
Net income after tax (NIAT) also plummeted to $965 million in 2015, down from $1.768 billion a year earlier, the company said in its 2015 Annual Report. Summing up the impact on the company’s performance in 2015 and the outlook for the current year, Dr Mohammed bin Hamed al Rumhy, Chairman of the Board of Directors of Oman LNG, said: “We enter 2016 with oil and gas prices still languishing at values more than two thirds below their mid-2014 high. To say that this does not present challenges to our company would be to deny the undeniable. The company has shown wisdom in responding to this challenge; as we have had to initiate some serious cost optimisation and take measures to create more efficiencies in all areas of our business.”
Harib al Kitani, Oman LNG Chief Executive Officer, commented: “Despite some encouraging signs early this year, the time has not yet arrived to declare a reversal of the oil and gas price trend. It is expected to come in due course, and in the meantime several budgetary restraints will continue in the oil and gas industry, including Oman LNG. This has not undermined the health of either our balance sheet or our company strategic objectives.” LNG production slumped to 7.91 million tonnes in 2015 — the lowest since 2011 — as natural gas was diverted by the government primarily to meet burgeoning demand from the power generation and water desalination. This led to the underutilisation of Oman LNG’s capacity by 2.49 million tonnes per annum (mtpa) last year, equating to around 15 per cent of the integrated 3-train plant’s total capacity of 10.4 mtpa.
However, to help offset part of the impact of market volatility on its revenue objectives, Oman LNG resorted to cargo swaps and diversions to optimise earnings — a strategy that has been aided by Oman LNG’s integration with sister firm Qalhat LNG in 2013, the CEO noted. A total of 126 cargoes (83 from Oman LNG and 43 from Qalhat LNG) were loaded from the integrated Sur plant in 2015. Meanwhile, production of natural gas liquids (NGL) — a byproduct of gas liquefaction — also suffered its biggest fall in five years to 241,185 metric tonnes last year, down from 145,711 metric tonnes in 2014. NGLs are typically lifted by state-owned Oman Oil Refineries and Petroleum Industries Company (Orpic) for processing into fuel and other refined petroleum products.
Qalhat LNG revenues at $870m
Revenues generated by Qalhat LNG as its share of gross earnings from the integrated three-train LNG plant amounted to $870 million in 2015.
Qalhat LNG owns the third of the three liquefactions trains, although all three trains are operated by Oman LNG. The Omani government (with a 46.84 per cent stake) and Oman LNG (with a 36.8 per cent share) are the main shareholders in Qalhat LNG. Qalhat LNG has three long-term sale and purchase agreements (SPAs) for a total contracted volume of approximately 3.3 mtpa. The agreements to supply LNG include a 20-year SPA with Spain’s Union Fenosa Gas (1.65 mtpa), a 17-year SPA with Japan’s Osaka Gas (0.8 mtpa) and a 15-year SPA with Mitsubishi Japan (0.8 mtpa).
Oman Daily Observer
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