OREANDA-NEWS. Oman Oil Company (OOC) SAOC, the Sultanate’s flagship energy investment firm, is poised to acquire a 40 per cent stake in BP Oman upon the conclusion later this year of a much-awaited agreement on the development of Block 61’s tight gas reserves, Oil & Gas Minister Dr Mohammed bin Hamed al Rumhy (pictured) revealed here yesterday. Speaking to journalists on the sidelines of the Oman Energy Forum 2014, held at Al Bustan Palace — A Ritz Carlton Hotel, he said the wholly Omani government-owned company will be a partner in the joint venture that will harness the block’s potentially immense gas reserves potential. “Oman Oil will become a partner when commerciality is declared. Then BP Oman (the block’s licensee) will be owned 40 per cent by Oman Oil and 60 per cent by BP,” the Minister stated in response to a query on the keenly-anticipated deal.

That landmark agreement, dubbed the ‘Declaration of Commerciality’, will be signed later this year, potentially opening the way for prodigious new streams of natural gas to become available for Oman’s increasingly energy-hungry economy. “We hope to have everything in place before the coming Christmas break; so by early to mid-December, we are looking to have all the agreements signed and sealed. “The lawyers are working on them right now. Then (the government and BP) will declare commerciality, upon which, work will start on the drilling, building of facilities, pipelines, and all that goes with it,” Dr Al Rumhy stated. Development of the block’s reserves, the Minister, is envisaged in more than two phases, with the focus presently on Phase 1. Total investment over the roughly 30-year timeframe of the production sharing contract is estimated at USD 15 – 20 billion, he added. The first phase development will target Khazzan, an area located in the south of the Block. The goal is to develop and operate a 1 billion cubic feet per day (bcf/d) tight-gas development. The target start-up is the first-quarter of 2017 with a 30-year operating period with a possible 10 year extension.

Commenting on the outlook for Iranian gas imports, Dr Al Rumhy said it would take at least another four years before gas flows commenced, given especially the complexities intrinsic in constructing an undersea pipeline between the two countries. In August, the Sultanate signed a landmark MoU for the supply of Iranian gas potentially worth billions of dollars over a 25-year timeframe. As a first step, both sides are studying viable routes for the laying of a gas pipeline that will channel Iranian gas to the Sultanate. “We are currently doing a survey to find out the optimum distance and characteristics of the seabed and all that goes with it,” said Dr Al Rumhy, noting that a pipeline project of this nature was fraught with many technical challenges, including seabed conditions, long lead times with regard to pipeline procurement and construction, among other factors. “So we will take one step at a time,” he remarked. Asked about new acreage floated by the Omani government for exploration and development, he said around 3-4 blocks were being firmed up for production sharing agreements before the end of this year. They comprise one offshore block and at least two onshore concessions, he added.