BP Oman's gas project to start production by 2017

INTERNATIONAL oil giant BP Oman said that construction work of its Khazzan natural gas project is now 65 per cent complete and the first gas is expected in late 2017. The production from the field will eventually result in an increase of around 40 per cent to Oman’s natural gas supply.

BP and its partner Oman Oil signed an agreement to develop a second phase of the Sultanate’s Khazzan natural gas field, taking the investment in the project to £11.03bn ($16bn).

BP’s agreement with the government of Oman signed in 2013, will add more than 1,000 square km to the original 2,700 square km block and it is expected to start delivering gas in late 2017.

The development of the tight gas reservoirs at Khazzan are a significant technical challenge, owing to the low porosity of the reservoir rock.

The second phase is expected to come on stream in 2020, and together they are expected to produce 1.5 billion cubic feet of gas per day - the equivalent of a third of Oman's total daily gas supply.

BP is the operator of the block, with a 60 percent interest. State-owned Oman Oil holds the other 40 percent.

Workers at the Khazzan natural gas fieldThe oil major is using its position as one of the world’s pioneers in tight gas production to develop the Khazzan field, classified as one of the Middle East’s largest unconventional gas resources, while investing in and developing Omani capability.

Meantime, Oman is rescheduling about five percent of its liquefied natural gas (LNG) shipments in 2016 as rising domestic demand for power generation is impacting the amount of gas available for exports.

Iran has started discussion with Oman on using spare capacity of Oman LNG, to process Iranian gas for exports. Dr Mohammed bin Hamad Al Rumhy, minister of oil and gas, said that Oman LNG has a spare capacity of 1.5 million tonnes per annum, which can be used by Iran for liquefying their natural gas.

In contrast to the natural gas situation, Oman is ready to reduce its oil production by 5 to 10 per cent “if other oil Opec producers willing to do so,” said Oman’s Minister of Oil and Gas, Mohamad Al Rumhi.

However, Mr Al Rumhi, who was speaking at a press conference in Muscat, said that Oman has not yet been invited to attend the Opec meeting in Doha to discuss a possible freeze. Al Rumhi predicted that oil prices will gradually go up, and he expects oil prices to touch $60 to $70 a barrel by the year end.