UK’s BP signs deal to develop $16bn Oman shale gas project

KARACHI (ICIS)–UK energy giant BP has signed a 30-year gas production sharing and sales agreements to develop a shale gas project in Khazzan at an investment of $16bn (€12bn) that will help meet Oman’s growing energy demand, the Omani government said late on Monday.

“The Khazzan project is the largest new upstream project in Oman and a pioneering development in the region in unlocking technically challenging tight gas through technology,” Oman oil and gas minister Mohammed Al Rumhy said in a statement.

The project aims to extract around one billion cubic feet (bcf) per day of gas from deep under central Oman, Al Rumhy said.

BP has won the concession in 2007, expecting total investment in the project to be around $16bn with an aim to extract enough fuel to meet around a third of Oman’s current domestic gas needs.

Project construction is expected to begin in 2014, with first gas production expected in late 2017 and plateau production of around 1 bcf, or 28.3 million cubic metres per day, expected in 2018.

BP, which will operate the project in central Oman, expects to develop around 7 trillion cubic feet (tcf) of gas in the Khazzan project, and to pump around 25,000 barrels per day (bpd) of gas condensate from the field.

The production sharing agreement and a gas sales agreement also allow BP to appraise more gas resources in Oman’s Block 61, which it expects to develop later.

State-owned Oman Oil Company Exploration & Production will hold a 40% stake in Block 61, while BP will hold the bigger stake of 60%

BP said it had also signed a non-binding memorandum of understanding with state-run Oman Oil Co to develop a 1m tonne/year acetic acid plant in Duqm. Further details on this project were not provided.

($1 = €0.73)