Oman LNG has paused the tender process for a significant expansion of its liquefaction facilities at the Qalhat industrial complex, despite having previously unveiled plans and shortlisted contractors for a new 3.8 million tonnes per annum (tpa) train.

Project Pause and Industry Reaction

After shortlisting three leading international engineering, procurement, and construction (EPC) consortia in 2023, Oman LNG recently informed bidders that the tender process is on hold. Industry sources described the decision as "unexpected" and "disappointing," noting it will impact the bid pipelines of the involved contractors. The operator did not provide a specific reason for the pause.

Potential Reasons for the Delay

Sources indicate the pause may allow Oman LNG to further optimize the project's development, review costs, and prioritize gas allocation to its existing three trains, which have a combined capacity of 10.4 million tpa. One source suggested the review might specifically focus on gas for the existing Train 3 before proceeding with the planned Train 4.

Project Details and Stakeholders

The expansion project, which had a targeted operational date of 2029, was designed to boost Oman's total LNG production capacity to 15.2 million tpa. The shortlisted EPC contenders were:

• A consortium of Saipem and Daewoo E&C.
• A consortium of Chiyoda Corporation and Samsung C&T.
• JGC acting independently.

US contractor KBR was previously awarded the front-end engineering and design (FEED) contract for the 3.8 million tpa train, which involves expanding utilities, adding an LNG tank, and upgrading jetty infrastructure. Oman LNG is a joint venture led by the state-owned Oman Investment Authority (51%). Other stakeholders include Shell (30%), TotalEnergies (5.54%), Korea LNG (5%), Mitsubishi and Mitsui (2.77% each), PTTEP (2%), and Itochu (0.92%).

Regional Context and Market Outlook

The pause occurs as several Middle Eastern nations, including Qatar and the UAE, are aggressively scaling up their LNG production capacities to capture a larger share of global markets, particularly in Asia and Europe. QatarEnergy, for instance, plans to double its LNG production to 160 million tpa. Analysts note that the Middle East is poised to add approximately 75 million tpa of new liquefaction capacity in the coming years, representing a major portion of global new supply additions after North America.