In a ceremony watched by more than 500 guests from all over the world, His Majesty Sultan Qaboos bin Said formally inaugurated the Oman LNG plant at Qalhat today (14 October 2000), and marked Oman's entry on to the world stage as a major exporter of liquefied natural Gas.

His Majesty honoured the Oman LNG project - the largest single construction project ever undertaken in the Sultanate - by unveiling a special Inauguration Stone at the plant that will serve as permanent reminder of Oman's ability to complete a world class project on time and under budget.

His Excellency Dr Mohammed Al Rumhy, Minister of Oil and Gas, said: "The LNG plant represents a new and prosperous era for the oil and gas sector within the country's macro economic development, which receives His Majesty's full care and support.

"The success of this project - accompanied by the close relations between the financiers, industries and the Omani Government - is clear proof of the high reputation and respect our country enjoys in the international arena. The project has also strengthened and enhanced existing economic relations between the countries where the companies which have contracted to purchase Omani gas are based - Korea, Japan and India."

The project represents a cornerstone in Oman's Vision 2020 programme, which, under the wise leadership of His Majesty, aims to diversify the nation's economy away from its dependence on oil. Exports of LNG are expected to contribute about 18% to oil and gas revenues and add up to 10% to Oman's gross national product over the next quarter of a century.

"I welcome the Oman LNG project as an endeavour of great benefit to our nation. It will provide our Sultanate with a major source of new income for more than a quarter of a century," said His Excellency Salem bin Shaban, Undersecretary at the Ministry of Oil and Gas and Chairman of Oman LNG.

"Oman LNG brings together the commitment and expertise of the Government of Oman and a number of world-class private companies working in partnership to utilise the Sultanate's valuable reserves of natural gas," he added.

The project's success was assured when it exported its first cargo of LNG in early April this year - exactly as planned when construction work started four years ago. The first cargo was loaded on board the HANJIN SUR bound for Korea Gas Corporation (KOGAS) - Oman LNG's largest customer at 4.1 million tonnes per annum (mtpa) over a 25-year period.

Since then, 19 cargoes of LNG have been exported - 15 to KOGAS and three to customers in the USA. Just five days ago, the Company also loaded its first cargo for Spain under a short term sales deal, which calls for a total of 17 cargoes to be delivered between now and early 2002.

Next month, Oman LNG expects to deliver it first cargo to Osaka Gas, the second of its long term customers. Osaka Gas has signed a sale and purchase agreement (SPA) for 0.7 mtpa over a 25-year period.

Oman LNG's third major long term customer, Dabhol Power Company of India, expects to take delivery of its first cargo of Oman's LNG in October 2001. The Dabhol SPA calls for the supply of 1.6 mtpa over a 20-year period.

The Oman LNG plant has a total capacity of some 6.6 mtpa of LNG. The sales contracts with KOGAS, Osaka Gas and Dabhol means the Company has successfully sold the entire output of the plant on a long term basis.

The Company also has a contract for the purchase of natural gas liquids (NGL) with Total Fina Elf, and four cargoes have been delivered.

The history of the US $2.5 billion Oman LNG project goes back to 1990, when significant volumes of non-associated natural gas were discovered in Central Oman. As a result, the Royal Dutch/Shell Group offered to undertake an LNG feasibility study. This was subsequently accepted by the Government of Oman, and the Oman LNG project was born. It has since become one of the fastest LNG projects ever built - taking just nine years from gas discovery for export to delivery of first cargo.

The project has achieved some unique milestones. The sales deal with KOGAS represented at the time of signing in 1996 the largest LNG contract ever signed between a single seller and a single buyer. The contract with Dabhol will result in the first ever import of LNG into India, and the two LNG liquefaction trains at 3.3 mtpa each are currently the largest of their type in the world.

General Manager and Chief Executive of Oman LNG Mr Graham Searle said: "His Majesty's presence with us on this special occasion is the culmination of a magnificent achievement by the Sultanate. It is clear proof that Oman is capable of matching the best in the world.

"It is a tribute to the many people who have been involved in making this project a reality - the Government of Oman, our private shareholders, our contractors - many of whom are Omani - and our staff.

"Many of those staff are with us today, and it is particularly pleasing to see so many Omanis among them. Indeed, more than 55% percent of our staff are Omani - an achievement we are proud of in an industry which is new to the Sultanate."

Petroleum Development Oman (PDO) has broken its own record for drilling the longest horizontal well in Oman. The well, Lekhwair 329H1, was drilled by Rig 32, operated by National Drilling Services Co, the same team that set the record in July last year. The new record stands at 5,396 metres total length - more than half a kilometre longer than last year's record - including a horizontal section of 3,930 metres.

Horizontal wells are now the standard well type drilled by PDO, even though they were virtually unheard of in the country 10 years ago. Unlike traditional vertical wells, which are drilled straight down into the oil-bearing reservoir rock, a horizontal well enters the reservoir at a shallow angle and then follows the contour of the reservoir layer. The technique enables more oil to be recovered, as more of the well's length has 'contact' with the reservoir.

Although Well Lekhwair 329H1 was not a novel well type per se at PDO, achieving the record relied on innovative thinking to get around the numerous problems associated with drilling such a long well. In particular, Rig 32 was not designed to drill a five-kilometre well. Senior Well Engineer Hatif Al-Hatmi explained: "The drillpipe-lifting capacity was fine, but the amount of pipe that we would have to withdraw from the well in order to change the drill bit could not be easily accommodated in the rig's mast. The solution was to focus on the drill bits and the 'bottomhole' assembly. We tried to select reliable and durable equipment that could operate under varying conditions so that we would have to withdraw the drillpipe from the hole as few times as possible."

The well was made to reach its record-setting extreme as a result of PDO's drive to be more efficient when it comes to drilling. Original plans to drill eight wells in the area were later modified so that half that number were drilled at double the distance. Because the new record well is thus the first of four being drilled in the area, it too may only hold the record for a short time.

Adds Al-Hatmi: "Each time PDO drills a well such as Lekhwair 329H1, we learn things that can be applied to the next well we drill. That way we can continue to drill faster and cheaper."