Oman- Weak crude prices could impact oil spending next year: H E Aufi

2015-08-29 02:48:10

(MENAFN- Muscat Daily) Muscat-

If crude prices continue to remain weak in 2016 it may create pressure on Oman to contain spending on oil production according to H E Salim al Aufi undersecretary at the Ministry of Oil and Gas (MOG). He however said focus would remain on maintaining current targets.

'There will be pressure from the MOG on oil producers and from the Ministry of Finance on PDO to try and contain costs as much as possible without impacting production' he said.

H E Aufi who was speaking to Muscat Daily on the sidelines of the launch of The Oil and Gas Year Oman 2015 said there is much that Oman's oil and gas industry can do to withstand the lower price cycle before choosing to start cutting down on output.

'We cannot touch the rigs because that is the immediate available production. Now you are left with future projects that you may suspend for a while but you need them as well. You may slow down a little bit on exploration but you need exploration to generate future wealth. You may slow down seismic activity as returns are not immediate on it but again you need that later on when you are ready to pick up [production].'

'We are cautious on the balance between 'immediate gains but long term pains' or taking a bit of pain today so that when the market corrects itself we have healthy portfolio to choose from' he added.

H E Aufi said the gap between cost of oil production in Oman and current global prices is still wide enough for companies to make profits.

'The oil and gas industry is still profitable. Our average cost of production is in the range of US$12 per barrel and sometimes even less. But the question is whether there is enough left for the government to finance its committed future projects?'

'We do not really have expensive oil in terms of per unit operating cost. But in terms of total expenditure we may have expensive oil because that also includes investments on future projects' he added.

About concerns over possible job losses for Omanis in the oil and gas sector H E Aufi said the MOG is currently working on a blueprint strategy in this regard.

'We are working on a blueprint strategy to see where we can redeploy [people] like-to-like or maybe even redeploy outside the industry if need be.'

'We are managing every issue in this regard and there is no major issue at this point of time. We have one or two projects that are coming to an end and where we are trying to figure out what we are going to do for the people. We the oil and gas industry MOG and all key players are already assessing what could potentially happen. And we are trying to put together solutions that will satisfy the majority if not all the potentially affected people.'

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