Oman LNG and Shell agree 10-year supply deal amid transition-led demand growth

Oman LNG has signed a 10-year liquefied natural gas supply agreement with Shell involving up to 1.6 million metric tons annually flowing to the multinational. The arrangement, which begins from next year, complements an October agreement between Shell Trading Company (Middle East) and the state-owned company, the Oman News Agency reported.

That extended a partnership between the parties beyond 2024 as growth demand for natural gas continues amid energy transition efforts, and as Oman LNG optimises operations to meet global consumer needs.

Growing focus on Oman fuel

Commenting on the supply agreement, Oman LNG chief executive Hamad Al Numani said the deal “contributes to opening new horizons for co-operation in global markets” and confirmed Shell’s “complete confidence in us as an approved supplier of liquefied natural gas”.

“The agreement strengthens Oman LNG Company’s reputation as a reliable provider of LNG and its pioneering ability to efficiently manage business operations to provide safe and sustainable energy to customers around the world,” added Al Numani.

As part of the amended agreement, Shell Gas, a unit of London-based Shell, remains the largest private shareholder in Oman LNG, with a 30% shareholding, while its role as technical adviser continues.

LNG’s key role

Oman is the second-largest exporter of LNG in the Middle East after Qatar and the commodity is viewed as crucial to the nation’s energy strategy.

Shell’s latest LNG outlook report projected demand for LNG to more than double by 2040, as industrial coal-to-gas switching gathers pace in China, and South Asian and South-East Asian countries lean more on LNG to support economic growth.

The report said global LNG trade grew by 1.8% to 404 million tonnes last year, from 397 million tonnes in 2022.

Oman LNG operates a complex in the sultanate’s north-eastern coastal city of Sur, capable of producing 11.5 million metric tonnes annually.

Walid Hadi, Chairman of the Board of Directors of Shell in Oman, described the supply agreement as an “important addition to the company’s stock of liquefied natural gas and integrated gas” and would help to ensure its “ability to meet the growing demand for flexible and reliable energy from its global customers”.