Al-Aufi: Oman relies on energy transition to grow the economy

م. سالم العوفي Eng. Salim al-Aufi

هذه الصفحة متوفرة بهذه اللغة: العربية

3 July 2021

MUSCAT (WAF): The need to embrace renewable and new energies in Oman is fueled by the need to sustain the industries, grow the economy, and the environmental drive; Salim al-Aufi, the Undersecretary of the Ministery of Energy and Minerals (MEM), said in a recent podcast interview.

Speaking in an interview with the Anglo Omani Society late last week, al-Aufi said that with the current gas supply and demand, “(the government) will not be able to sustain gas supply at its current level for the next 25 to 30 years. Let alone growing the economy using the gas supply.”

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Industrial projects in Oman takes up to 60% of the gas use, the oil fields take 24%, and the electricity generation takes 16%, according to the 2020 data issued by the National Centre for Statistics and Information (NCSI).

Despite the limited gas resources, the Omani official said the MEM is open to reconsider the gas price imposed on industries. “If the industry start to feel challanges with regards to their competitiveness due to gas price or electricity price and what have you, then, of course, the government will have to reconsider what sort of pricing they are willing to pass to the industry,” he elaborated.

He noted that the government is creating a basket of prices “so that if an industry is struggling and we are forced to lower the gas price, it doesn’t take us below the weighted average cost of buying the gas from the upstream operators.” The cost of buying gas from these operators is fixed based on the long-term agreements between the government and the operators.

In the meantime, Oman is moving towards utilising some of the gas to generate Hydrogen for a gradual transition into a greener and more sustainable energy mix over the next 10 years.

With Oman’s target to generate 30% of its power from renewable sources by 2030, the government seems to be willing, for the time being, to allow two state-owned energy groups, the recently-established Energy Development Oman (EDO) and OQ, to co-exist. Al-Aufi explained that the advantages “to advance the renewable energy and new energy agenda in the country” outweigh the cons of having the two entities competing or even colliding.

He added that few years down the line, the government might revisit the situation by continuing to have both the players or “consolidate that effort into a single government player.”