Page 4 - MEOG Week 05 2021

MEOG COMMENTARY MEOG

BP sells stake in Oman gas

project in major divestment move

The super-major has agreed to sell a 20% stake in Oman’s biggest
gas project as it seeks to reduce its debt while also diminishing

its exposure to hydrocarbons as part of its IOC to IEC strategy.

OMAN BP this week announced that it will sell a 20% that than Ghazeer.”
share of its majority stake in Oman’s Block 61 In 2016, BP and Oman Oil Company Explo-
concession to Thailand’s state upstream opera- ration & Production (OOCEP) signed a revised
WHAT: tor PTT Exploration & Production (PTTEP) for petroleum agreement with the Ministry of Oil
BP will sell a 20% stake $2.6bn. The acreage is home to the major Khaz- and Gas to expand the concession area in Block
in Oman’s Block 61 to zan and Ghazeer gas development phases. 61 for the Khazzan project to ensure its develop-
Thailand’s PTTEP for BP Oman operates Block 61 and owns a 60% ment through well-controlled quotas.
$2.6bn. stake, with local state-owned firm OQ holding This expansion extended the concession
30% and Malaysia’s Petronas with 10%. BP is area of Block 61 south and west by around 1,000
WHY: understood to have been courting Asian firms square km, to be added to the project’s existing
The asset is home to the since mid-2020 regarding a potential farm-down area of roughly 2,700 square km. The expan-
Khazzan and Ghazeer of its holding. sion enabled BP to begin work on Ghazeer
development phases, The announcement is a meaningful stride for and included additional resources of gas in the
which will produce 1.5 BP to achieve its goal of divesting $25bn worth area demarcated during exploratory drilling
bcf of gas. of assets by 2025 as the company seeks to ease operations.
its debt burden while also making a highly pub- In June 2020, BP Oman chairman Yousef bin
WHAT NEXT: lic move towards renewables and low-carbon Mohammed Al-Ojaili said that production of
The move is part of a energy. gas from Khazzan had reached 1 bcf per day. He
$25bn divestment drive added that 126 wells had been drilled at Khazzan
by BP, which is seeking to Block 61 and Ghazeer, out of a planned 300 wells over 15
cut its debt burden. Ghazeer, the second phase of Block 61’s devel- years.
opment, was launched in October, four months BP’s trading subsidiary buys roughly 10% of
ahead of schedule. Output has since ramped up the gas produced from Block 61, which is sup-
to 0.5bn cubic feet (14.2mn cubic metres) per plied in the form of LNG by Oman LNG. This
day of gas in addition to the 1 bcf (28.3 mcm) per deal runs until 2025.
day produced by the first phase project, Khaz-
zan. A further 65,000 barrels per day (bpd) of PTTEP expansion
condensate will also be produced. PTTEP made its entry into the Middle East in
BP commissioned Khazzan in late 2017 and early 2019, when Abu Dhabi’s Supreme Petro-
took the final investment decision (FID) to pro- leum Council approved the award of the Off-
ceed with Ghazeer the following year, targeting shore 1 and Offshore 2 blocks to a consortium of
additional reserves of 99bn cubic metres. The the Thai firm and Italy’s Eni.
two phases are expected to cost a combined Later that year, it acquired 100% of Portu-
$16bn. gal-based Partex Holding from the Calouste
The company’s CEO and former head of Gulbenkian Foundation for around $622mn,
upstream, Bernard Looney, said on his Linke- giving it a 2% stake in Muscat-backed Petroleum
dIn profile that “the sense of achievement [is] Development Oman (PDO) and a 1% share of
immense”. the country’s Mukahizna project in Block 53,
“The Khazzan gas development in Oman’s which is operated by Occidental Petroleum
Block 61 is a tremendous feat of engineering. (Oxy).
And the gas is up to 5 km below the surface in This added around 16,000 bpd of crude sales
narrow bands of hardened, dense rock.” as well as 2P reserves of around 65mn barrels of
Turning to the company’s recent strategic oil equivalent (boe) to PTTEP’s books, with the
shift, Looney said: “When we introduced our majority of these located in Oman. Partex also
plans to reinvent bp, we were clear that to deliver operates Brazil’s Potiguar field (50%) and holds
them we have to perform as we transform. There stakes in Kazakhstan’s Dunga field (20%) and
are few better examples of how we are doing just Angola’s Block 17/06 (2.5%).

P4 www. NEWSBASE .com Week 05 03•February•2021