OMAN - Oman Diversifies Overseas Investments.

The state-owned Oman Oil Co. (OOC) has diversified investments in overseas upstream and downstream ventures. OOC is investing in gas markets of countries importing its LNG, such as Spain, and has moved into the Chinese gas sector. At the same time, OOC concentrates on downstream ventures within Oman in partnership with foreign companies.

Under an agreement signed in October 2003, OOC holds 20% in petrochemicals JV in Thailand called Thai Olefins Co. (TOC). TOC, a subsidiary of partially state-owned Petroleum Authority of Thailand (PTT), holds a majority of 60%. The South Korean giant LG Group has remaining 20%. Its plant went on stream in 2006 with a 300,000 t/y capacity producing ethylene oxide and ethylene glycol. A PTT upstream unit is producing natural gas and condensate in Oman and selling the gas for the local market (see below).

OOC in 2004 acquired 15% in Infraestructuras de Gas of Spain, which holds 50% in the LNG import/regasification terminal in Sagunto. The 85% majority in IdG is held by Union Fenosa Gas (UOG), a gas utility in Spain which is a 50-50 JV of the Spanish power group Union Fenosa and ENI of Italy.

UFG has signed two LNG import contracts in Oman: one for liquefied methane delivered in 2004-5 by Oman LNG Co. (OLNG), which has a plant with two trains in the sultanate, and a 20-year contract from January 2006 for purchase from Qalhat LNG (QLNG), the company which has Oman's third LNG train on stream since late 2005. UFG took QLNG's first shipment in late 2005 (see gmt7OmanLNG-Feb11-08). UFG is growing rapidly in the LNG business. It has a major stake in an LNG plant built in Egypt (see omt3EgyptGasExptJan18-08).

OOC's petroleum trading JV with Vitol, a Dutch trader operating internationally (see omt7OmanExportsFeb11-08), has been in business since 2005. This venture is expected eventually to take on riskier speculative positions in the oil market, a rare move among oil producers who typically have a conservative stance.

Dubai's Emirates National Oil Co. (ENOC), which primarily markets and hedges oil products and crude for the emirate's government, is so far the other most significant example of an active presence of a Middle East producer in the markets. Algeria's Sonatrach set up a derivatives arm in 2005, the only other OPEC state to do so.