MOSCOW (MRC) -- Plans to build a new gas-to-liquids (GTL) project in Oman between the government and Shell have been thrown into doubt by the global economic downturn, the sultanate's oil minister Mohammed AL-Rumhy has told S&P Global.
"We've decided to revisit the GTL with our partners Shell," said Rumhy in a June 11 interview. "We will see what is best for the project, and this work could take up to three months. So, by the third or fourth quarter we will make a final investment decision of some kind on the project. We'll see how it goes."
Shell didn't respond to request for comment. The oil major has been looking at building a GTL plant in Oman that would have a capacity of 40,000 b/d to 45,000 b/d, and take its feedstock from the Mabrouk North East field that was discovered in March 2018. The field is thought to hold recoverable reserves of more than 4 TcF (112 Bcm) and 112 million barrels of condensate, according to semi-state owned Petroleum Development Oman (PDO), which discovered the field in its giant Block 6 concession.
Under a memorandum of understanding signed early 2019, Shell and Total committed to developing the upstream block, taking working interests of 75% and 25%, respectively. The objective was to achieve an initial gas production of around 500 million cubic feet per day (MMcfd) and a potential to reach 1 billion cubic feet per day (bcf/d) at a later stage. As part of the agreement Shell was to build the GTL plant and Total a liquefied natural gas (LNG) bunkering service for vessels calling at Sohar port.
"We are looking at upstream and downstream as a package and see how best to move forward," said Rumhy. "People will look into the FEED [front-end engineering and design] and cost element of it."
Developing GTL projects can prove challenging. For instance, Shell has previously built the 260,000 b/d Pearl GTL project in Qatar. Initially the project was estimated to cost USD5 billion, however this figure ballooned by the time it was completed in 2012, according to Shell.
Oman and Shell are not considering bringing on another partner for develop the GTL project, Rumhy said.
"Either the project is good, in terms of rate of return for the investors, and we go ahead, or not," said Rumhy. "It's not a question of raising capital, where bringing in a partner would solve that difficulty. It's very simple: is this a viable project or not under the new conditions? The pandemic has brought up new questions in everything we do."
As MRC wrote before, in May 2020, CNOOC Oil & Petrochemicals Co. Ltd (CNOOC), Shell Nanhai B.V (Shell) and the Huizhou Government have announced a strategic cooperation agreement to further expand the CNOOC and Shell Petrochemical Company (CSPC) 50:50 joint venture in Huizhou, Guangdong Province, China.
The expansion is planned to serve the growing number of intermediate and performance chemicals customers in the key market of China, supplying products including SMPO, polyols, ethylene glycol, polyethylene (PE) and polypropylene (PP). These chemicals are used in a wide range of end products, in healthcare, construction, fabrics, packaging, transport and electronics. For the first time in Asia, Shell would apply its advanced technology for linear alpha olefins. The project is intended to include construction of a new 1.5 million-tonnes-per-year ethylene cracker, with the mega-site bringing economies of scale and enhanced competitiveness.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.
Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.