Oman Signs EPSA With OccidentalOccidental And Mubadala

The Oman Ministry of Oil and Gas has signed an exploration and production sharing agreement (EPSA) with Occidental Petroleum CorporationOccidental Petroleum Corporation and Mubadala Development CompanyMubadala Development Company of Abu Dhabi, under which the three parties will develop four existing gas fields and explore for potential new discoveries in a newly formed contract area, Block 62, known as ‘Habiba’ in the Dakhiliyah region in northern Oman. OccidentalOccidental, operator with a 48% interest in the EPSA said in a press release issued on 24 November that Mubadala will hold a 32% interest and state-owned Oman Oil Company (OOC)Oman Oil Company (OOC) the remaining 20%. The agreement is for a period of 20 years and covers an area of 2,269 sq km. OccidentalOccidental added in the press release that exploration, appraisal and development activities will commence immediately and that production from the area in question is expected to begin in 2010 and reach plateau of about 165mn cfd (27,500 barrels of oil equivalent per day – boed) by the end of 2011. Occidental’s net share of production at plateau is expected to be approximately 10,000 boed, with Mubadala’s net share around 6,000 boed. Total capital expenditure in the contract area is expected to be approximately $500mn over the next four years, and in addition to the field developments the investment will include up to nine exploration wells over a six-year exploration period to test the upside potential of the shallow and deep gas plays found in the region.

Oman’s Minister of Oil and Gas Muhammad al-Rumhy, who signed the EPSA, said that the concession award represented another successful breakthrough in the ministry’s ongoing efforts to bring in new players to develop and explore for new gas reserves. “This is in continuation of the strategy that ended up bringing into the country British Gas and BPBP. We sliced off three blocks which were under PDO’s exploration on behalf of the government. The first lot of these blocks was signed away today. By January, we hope to be able to sign two more concession agreements specifically for gas,” the minister added. He went on to say that Block 62 could have a gas potential similar to that of BP’s Block 61, but that was not known yet. For his part OccidentalOccidental ’s Chairman and CEO Ray Irani said “we are pleased to expand our existing relationship with Oman and look forward to working with our partners to help ensure that future supplies of natural gas will be available to fuel Oman’s economic growth.” OccidentalOccidental is Oman’s second largest crude producer, and operates the Mukhaizna heavy oil development and other concessions, which are forecast to produce 150,000 b/d by 2010-12 (MEES , 21 April).