Cablegate: Oman Lowers Oil Output Projections

VZCZCXYZ0002
RR RUEHWEB

DE RUEHMS #0467 1701043
ZNR UUUUU ZZH
R 181043Z JUN 08
FM AMEMBASSY MUSCAT
TO SECSTATE WASHDC 9731

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

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