Oman producing all-out on oil as global price rout seen over

Oman has no plans to join the Organisation of Petroleum Exporting Countries, which controls about 40% of the world’s crude outputBloomberg/MuscatOman, the biggest Middle Eastern oil producer that’s not a member of Opec, is boosting crude output to as much as possible with the global price rout over, Salim al-Aufi, undersecretary of the oil and gas ministry, has said.Oman will produce 980,000 bpd this year, al-Aufi said in an interview in Muscat on Sunday. That would be 4% higher than in 2013, according to BP data. Oman will provide 2014 production figures in April, he said.“It’s crucial that we continue executing the future projects,” al-Aufi said. “It’s crucial that we continue the seismic activities and the exploration activities because when the market turns around, we need to have these opportunities identified and ready to go.”Rising supply from the US to Russia and slower growth in China, the world’s second-biggest oil user, are contributing to a worldwide crude surplus that Oman estimates at 1mn bpd. Brent crude futures have climbed 4.3% this year. The contract fell 48% last year.“Has it bottomed?,” al-Aufi said, when asked about the oil price. “It probably did.”Governments in the region have had to reduce subsidies on diesel, natural gas and utilities while companies cut billions from capital budgets because of low oil prices. Oil and gas accounts for 79% of Oman’s revenue, al-Aufi said. With a projected deficit of 2.5bn rials ($6.49bn), Oman’s 2015 budget assumes an oil price of $75 a barrel, he said. A balanced budget would need oil to be over $100, he said.Oman has no plans to join the Organisation of Petroleum Exporting Countries, which controls about 40% of the world’s crude output, he said. Saudi Arabia, the world’s biggest oil exporter, led Opec’s decision to keep output targets unchanged rather than cut production to boost prices.“If you’re a member of Opec then you will follow,” al-Aufi said. “We like to stay independent as much as possible unless we can influence the decision that will be taken by whatever organisation.”Oman’s oil ministry asked energy companies about three weeks ago to review their costs to ensure production is still economical, he said.“There are indications that there will be some cost reduction,” he said. “Not activity reduction, cost reduction.”The government is still in talks with Iran to build a natural gas pipeline, he said. In March, Iran announced that it signed an agreement to build a $1bn pipeline to transport natural gas from its South Pars field to Oman.“The intentions are still there, that at some point in time we start importing gas from Iran,” al-Aufi said. Natural gas demand in Oman is growing six to 10% a year and domestic prices will increase at least 3% a year, he said.