OMAN LOWERS OIL OUTPUT PROJECTIONS

UNCLAS MUSCAT 000467 SENSITIVE SIPDIS STATE FOR NEA/ARP, EEB/ESC/IEC/EPC E.O. 12958: N/A TAGS: EPET ENRG ECON MU IR SUBJECT: OMAN LOWERS OIL OUTPUT PROJECTIONS REF: MUSCAT 303 ¶1. (U) On June 15, Minister of Oil and Gas Dr. Mohammed bin Hamad al-Rumhy told media outlets that Oman's 2008 oil production figures had been revised downward from a projected 790,000 barrels per day (bpd) to 750,000 bpd. Oman reported a production rate of 743,000 bpd over the first four months of 2008, however, a 4.1% increase from the 714,200 bpd figure posted for the same time period in 2007. In efforts to further increase production levels, the government announced that the country's main producer, Petroleum Development Oman (PDO),will outsource 18 small fields to Omani-based Petrogas, a division of MB Petroleum, for exploration. ¶2. (U) The Minister also provided a status update on the completion of a gas compressor station being built in al-Buraimi that would facilitate gas flows coming in from Qatar via the Dolphin project. He estimated that completion of the unit would be finished by July in order for Oman to accept its allocation of 200 million standard cubic feet. The Minister acknowledged that gas still remained "very tight," and that Oman is continuing discussions with Iran on sourcing additional supplies of gas, though the two sides have "not finalized anything." ¶3. (SBU) Comment. The revised figure announcement does not come as a surprise, as a close Embassy contact in the oil sector told Econoff in April that Oman's producers would have been very hard pressed to meet the government's optimistic 2008 outlook. And even though Oman's 2008 budget remains premised on the production rate of 790,000 bpd, high oil prices and government's conservative estimation of oil prices should keep its finances in the black. End Comment. FONTENEAU