BP has agreed to sell a 20% participating interest in Oman’s Block 61 to PTT Exploration and Production Public Company Limited (PTTEP) of Thailand for a total consideration of $2.6 billion. Following completion of the sale, bp will remain operator of the block, holding a 40% interest.
Subject to approval from the Sultanate of Oman and partners, the deal is
expected to complete during 2021. The agreed total consideration of $2.590
billion comprises $2.450 billion payable on completion (subject to final
adjustments) and $140 million payable contingent on pre-agreed future
conditions.
Following completion, participating interests in Block 61 will be: bp, 40%; OQ,
30%; PTTEP, 20%; and PETRONAS, 10%.
PTTEP is Thailand’s national petroleum exploration and production company, with
interests in 15 countries, including Oman.
“We are committed to bp’s business in Oman – this agreement allows us to remain at the heart of this world-class development while also making important progress in our global divestment programme.” Bernard Looney, chief executive officer, bp
Block 61, covering around 3,950km2 in central Oman, contains the largest tight gas development in the Middle East. The block has already had two phases of development – Khazzan, which began production in 2017, followed by Ghazeer in October 2020.
These two developments, targeted at developing a total of 10.5 trillion cubic feet of gas resources, have a combined daily production capacity of 1.5 billion cubic feet of gas and more than 65,000 barrels of condensate. Gas from Block 61 is exported for domestic consumption into Oman’s national gas grid, while also boosting availability of feedstock supply for Oman LNG.
“We are pleased to welcome PTTEP to the successful Block 61 partnership. Block 61 is a pioneering development that has applied leading techniques and technologies to maximise efficiency and minimise emissions.
“We are committed to bp’s business in Oman – this agreement allows us to remain at the heart of this world-class development while also making important progress in our global divestment programme.” bp chief executive officer Bernard Looney said.
bp is targeting divestment proceeds of $25 billion by 2025. Most recently, the $5 billion sale of bp’s petrochemicals business to INEOS completed at the end of 2020.
“We look forward to working closely with PTTEP, our other partners, and the Government of Oman on the continued success of Khazzan and Ghazeer, and to explore further opportunities in Block 61,” Yousuf Al Ojaili, vice president, bp Oman.
bp has had an upstream presence in Oman since 2007 when the original production sharing agreement (PSA) for Block 61 was signed. Beyond Block 61, bp and Eni signed a PSA for Block 77 in 2019. bp Trading & Shipping also purchases LNG from Oman LNG under a seven-year deal that started in 2018.
“We look forward to working closely with PTTEP, our other partners, and the Government of Oman on the continued success of Khazzan and Ghazeer, and to explore further opportunities in Block 61.
“We remain very much committed to our strategic partnership with Oman. We will continue to support critical national energy infrastructure for the Sultanate through Block 61, invest significantly in local companies and Omani talent, and deliver an ambitious social investment programme.” bp Oman vice president Yousuf Al Ojaili commented.
In 2020, Omanisation in bp Oman reached around 85% and Block 61 spend with Omani-registered companies exceeded $610 million.
Block 61 timeline
- 2007: PSA for Block 61 Khazzan field signed
- 2007-2013: appraisal confirmed existence of significant tight gas resources
- 2013: Khazzan, first phase of field development, sanctioned
- 2016: bp signed an amendment to the Block 61 PSA agreement adding additional area to the south and west of original Block 61 development, allowing a second phase of development, the Ghazeer field
- 2017: first gas from Block 61 Phase 1, Khazzan, delivered ahead of schedule
- 2018: development of Block 61 Phase 2, Ghazeer, sanctioned
- 2018: OQ sold 10% interest in Block 61 to Petronas
- Oct 2020: first gas from Ghazeer delivered ahead of schedule.
