Oman and TotalEnergies sign LNG supply deal

29 April 2024

Oman LNG has signed a Sale and Purchase Agreement (SPA) with TotalEnergies to supply 800,000 metric tons per year of liquefied natural gas (LNG) for ten years from 2025. At the same time, the energy major also announced a Final Investment Decision (FID) of the Marsa LNG project, which will see 150 million cubic feet of natural gas per day coming from the Mabrouk North-East field.

Image: TotalEnergies

The announcements came after Patrick Pouyanné, Chairman and CEO of TotalEnergies met with His Majesty Sultan Haitham bin Tariq Al Said and His Excellency Eng. Salim bin Nasser Al Aufi, Minister of Energy & Minerals during a visit in Muscat on 21 April.

TotalEnergies owns 5.54% of Oman LNG and will be supplied by the company for 10 years from 2025, making the company one of the main offtakers of Oman LNG's production. Oman LNG is 51% owned by the Omani government, 30% by Shell, 5% by Korea LNG, 2.77% each by Japan's Mitsubishi Corporation and Mitsui & Co, 2% by Thailand's PTTEP and 0.92% by Itochu Corporation.

The Marsa LNG project will be operated by a joint venture called Marsa Liquefied Natural Gas. The company will be owned by TotalEnergies (80%) and state oil company OQ (20%). The Marsa LNG project which combines:

- Upstream gas production: 150 Mcf/d of natural gas, coming from the 33.19% interest held by Marsa in the Mabrouk North-East field on onshore Block 10, which will provide the required feedstock for the LNG plant. Block 10 production started in January 2023 and reached plateau in April 2024. The FID allows Marsa LNG to extend its rights in Block 10 until its term in 2050.

- Downstream gas liquefaction: a 1 Mt/y capacity LNG liquefaction plant will be built in the port of Sohar. The LNG production is expected to start by first quarter 2028 and is primarily intended to serve the marine fuel market (LNG bunkering) in the Gulf. LNG quantities not sold as bunker fuel will be off-taken by TotalEnergies (80%) and OQ (20%).

- Renewable power generation: a dedicated 300 MWp PV solar plant will be built to cover 100% of the annual power consumption of the LNG plant, allowing a significant reduction in greenhouse gas emissions.

The Marsa LNG plant will be 100% electrically driven and supplied with solar power, positioning the site as one of the lowest GHG emissions intensity LNG plants ever built worldwide, TotalEnergies said in a statement.

The ambition of the Marsa LNG project is to serve as the first LNG bunkering hub in the Middle East, showcasing an available and competitive alternative marine fuel to reduce the shipping industry's emissions.

“We are proud to open a new chapter in our history in the Sultanate of Oman with the launch of the Marsa LNG project, together with our partner OQ, demonstrating our long-term commitment to the country. We are especially pleased to deploy the two pillars of our transition strategy, LNG and renewables, and thus support the Sultanate on a new scale in the sustainable development of its energy resources”, said Patrick Pouyanné, Chairman and CEO of TotalEnergies. “This very innovative project illustrates our pioneer spirit and showcases the relevance of our integrated multi-energy strategy, with the ambition of being a responsible player in the energy transition. By paving the way for the next generation of very low emission LNG plants, Marsa LNG is contributing to making gas a long-term transition energy.”