MUSCAT: Oman will double natural gas prices for some industrial consumers by 2015, with a rise of 33 percent for 2013 alone, Oman’s minister for financial affairs said yesterday in a rare Middle Eastern move to slash fuel subsidies.
The Omani government and some major industrial consumers have agreed that gas prices will rise from $1.5 per million British thermal units (mmbtu) in 2012 to $2/mmbtu in 2013, Darwish Al Balushi said. In 2014 prices will rise to $2.5, then hit $3 in 2015 with further rises expected in years beyond that, he said. Gas-hungry industry has flourished in the Middle East on fuel priced at a fraction of international levels but its future growth is in doubt unless more sources can be developed.
Omani gas production has risen sharply over the last decade and the non-Opec oil producer remains a net gas exporter. But rampant demand growth at home means it must tap trickier and more costly gas deposits to maintain exports of liquefied natural gas while satisfying its own gas needs. Key to Oman’s quest to boost production is the Khazzan project. Developer BP has been haggling with the government over how much it can sell any gas produced and the sales price increases announced for the next few years should help make BP’s business case. Reuters
