Oman is pursuing petrochemical projects as a way of diversifying its economy and developing value-added industries. In January 2001, Ferrostaal (Germany) signed a contract with the Omani government to build a methanol plant in Sohar. The deal is estimated to be worth over $420 million and is a joint venture between Ferrostaal, the state-owned Omani Oil Company, and a private Omani group, Omzest. The project will utilize some of the 5 trillion cubic feet (Tcf) of gas that the Omani government has made available to new industries in Sohar. The plant is expected to begin operation in 2005 and has a projected production capacity of 5,000 tons of methanol per day.
Natural gas has become the chief focus of Omans economic diversification strategy. Intense exploration has raised proven natural gas reserves from only 12.3 trillion cubic feet (Tcf) in 1992 to its current level of 29 Tcf, according to the Oil and Gas Journal. The government is also continuing its aggressive exploration campaign. Most of Omans reserves are in PDO-owned areas, and the company is Omans biggest natural gas producer. Most natural gas in Oman is associated with oil, but even that which is non-associated is often located close to the countrys oil fields. More than 10 Tcf of Omans non-associated natural gas is located in deep geological structures, many of which are beneath active oil fields. In 2003, Oman produced 583 billion cubic feet (Bcf) of natural gas. In addition to the PDO, a number of foreign firms are involved in Omans natural gas sector. In September 2003, Atlantis, a subsidiary of the Chinese firm Sinochem, began to drill a gas find containing up to 300 Bcf. Gulfstream (now Anadarko) was the first private company to be awarded an onshore gas concession. In August 2001, it received a fixed price gas sales agreement with the government and a 100% concession to develop three gas fields it discovered in Haffar Block 30. Anadarko has already drilled an exploratory well, and hopes to reach an eventual output level of over 80 million cubic feet per day. The field has proven reserves of 300 Bcf.
Novus Petroleum Ltd. (Australia) signed an exploration and production agreement with the Omani government for Blocks 15 and 47 in northern Oman in May 2001. The deal committed Novus to a three-year exploration period, which could be extended depending on the results of the exploration. The blocks form part of the same geological structure as Novus offshore gas producing field in Block 8, in the Straits of Hormuz. In April 2002, Novus signed another agreement for Block 31. The company also plans to drill the first well in the Iranian-Omani jointly held West Bukha/Hengam gas field in 2006. The field holds an estimated 3 Tcf of gas. Omans gas network has been placed under the authority of Oman Gas Company (OGC), set up by the government to oversee the sultanates gas development program. In April 2001, Oman awarded a contract to operate the countrys natural gas transportation and distribution infrastructure for the next five years to Canadas Enbridge and Terasen. The contract includes a provision for technology transfer and training, so operation can be shifted to Omani staff after five years.