Oil & Gas

The gas deal between Oman and Germany is set to implement a rare practice in Oman, involving fixed-term contracts for the first time. The agreement, approved between SEFE, a German company, and Oman LNG in August 2023, will supply 400,000 metric tons of liquefied gas annually from 2026 to 2029.

This deal, based on FOB (Free on Board) terms, will see the price linked to the European gas hub index, a significant development for Oman, as it typically bases contracts on a link to crude oil prices. The sale and purchase agreement was announced on March 21, as reported by S&P Global Commodity Insights during the week ending April 9.

This shift in pricing methodology reflects changing market dynamics, particularly in Europe, where long-term gas contracts now prefer linking prices to the gas hub index rather than crude oil. Other recent contracts, such as Qatar Power's agreements with Shell, Eni, and Total Energy in 2023, have also included similar pricing mechanisms, indicating a broader trend in the industry.