Oman weighing domestic gas pricing reform: IGC
MUSCAT, JUNE 21
Oman’s natural gas sector is undergoing a period of transformation as policymakers and industry stakeholders seek to balance rising domestic demand, industrial growth and energy transition objectives, according to Abdulrahman al Yahyaei, CEO of Integrated Gas Company (IGC), the Sultanate of Oman’s sole aggregator and shipper of natural gas.
Commenting on the evolving dynamics of the domestic gas market, Al Yahyaei indicated that growing pressure on gas resources is prompting a broader reassessment of how natural gas is valued, allocated and utilised across the economy.
One area attracting increasing attention is domestic gas pricing. With international gas prices having risen significantly in recent years amid geopolitical tensions and changing energy market fundamentals, Oman is also evaluating how pricing mechanisms can better support efficiency and economic value creation.
“Domestic gas pricing is an important policy question,” Al Yahyaei said. “Global gas prices and opportunity costs have changed significantly, and this creates a need to ensure that domestic pricing encourages efficiency, reflects economic value, and supports responsible consumption.”
At the same time, he stressed that pricing reforms must preserve Oman’s attractiveness as an investment destination for strategic industries. “The direction is toward more disciplined, transparent and value-based pricing rather than blanket subsidies,” he added.
The changing market environment is also encouraging industrial consumers to adopt measures aimed at reducing dependence on natural gas. According to Al Yahyaei, interest is growing in energy-efficiency initiatives, electrification, renewable energy integration and lower-carbon production pathways.
“We are seeing increasing interest from industrial customers in energy efficiency, electrification, renewable integration and lower-carbon production models,” he noted. Some companies are also exploring hydrogen, renewable electricity and process optimisation strategies to improve competitiveness and align with international sustainability requirements.
Abdulrahman al Yahyaei, CEO, IGC
From IGC’s perspective, such developments help alleviate pressure on the national gas system by freeing up volumes that can be directed towards higher-value applications. Export-oriented industries, in particular, are increasingly motivated by the growing importance of green and low-carbon product credentials in international markets.
At the same time, renewable energy is beginning to reshape Oman’s energy landscape. Utility-scale solar and wind projects are already contributing to lower gas consumption during periods of renewable generation, although the impact remains gradual.
“Solar helps during daylight hours, but the system still requires gas-fired generation for evening peaks, seasonal demand and system stability,” Al Yahyaei explained. As additional solar, wind and electricity storage projects are deployed, renewable energy is expected to play a larger role in reducing pressure on gas supplies. Nevertheless, natural gas will remain indispensable for ensuring reliability and flexibility throughout the energy transition.
Seasonal electricity demand continues to present one of the biggest operational challenges for the gas system. During the summer months, soaring temperatures drive a sharp increase in air-conditioning loads, resulting in significantly higher gas consumption by the power sector.
“During summer, power sector gas consumption increases sharply due to air-conditioning demand. This is one of the main stress points in the gas system,” Al Yahyaei said.
To manage these seasonal peaks, IGC works closely with Oman’s electricity and gas sector stakeholders to monitor demand, secure supplies, optimize nominations and maintain operational flexibility, while ensuring uninterrupted service to priority sectors.
Meanwhile, ensuring fair and efficient allocation of gas remains central to IGC’s mandate. During periods of supply tightness, gas allocation decisions are guided by national priorities, including security of supply, power and water requirements, contractual commitments, strategic industries, employment creation, Omanisation and in-country value objectives.
“Gas allocation is guided by national interest,” Al Yahyaei emphasised. “IGC’s role is to make allocation more transparent, disciplined and commercially sound, while ensuring that gas is not treated as an unlimited resource.”
As Oman advances its industrialisation and energy transition agendas simultaneously, IGC’s role is increasingly expanding beyond that of a conventional gas aggregator, placing the company at the centre of efforts to maximise the value of the Sultanate’s gas resources while supporting long-term economic diversification and sustainable growth.
