BP has signed a $16 billion deal to develop the massive Khazzan unconventional gas field in central Oman.
The agreement with the Sultanate will see around 300 wells drilled over a 15-year period, peaking with the extraction of up to one billion cubic feet of gas each day.
Amended exploration and production sharing contracts were also concluded, as was a 30-year sales deal and terms for further appraisal of nearby gas resources to be developed during subsequent phases.
“Today’s signing is an important step in the Sultanate of Oman’s plans to meet growing demand for energy over the coming decades and to contribute to economic development in Oman,” said Omani oil and gas minister Mohammed Al Rumhy.
“The Khazzan project is the largest new upstream project in Oman and a pioneering development in the region in unlocking technically challenging tight gas through technology.”
BP said “hydraulic stimulation” better known as fracking would be required to stimulate the flow of gas, given the nature of the underground reservoirs involved.
The company will also launch an educational programme for technicians, and has committed to qualifying up to 150 people in support of the project.
“We are very pleased to be going ahead with this major project, which is very important for both Oman and for BP,” said BP chief executive Bob Dudley.
“This enables BP to bring to Oman the experience it has built up in tight gas production over many decades.
“This is one more example of BP developing a long term gas supply chain, in this case to bring energy to customers in Oman for decades to come.”
The total investment includes appraisal and well testing expenditure already incurred at the field, around 250 miles south-east of the capital Muscat.
The firm will apply new technologies to the field, where construction will begin next year. First gas is expected in 2017, with ramp-up to full production the following year.
In all, the project could result in the development of seven trillion cubic feet of gas, with production tied back to a new central processing facility.
State oil company OOCEP will have a 40% stake in the project, while the two firms will also partner on the construction of the world’s first acetic acid manufacturing plant.
A detailed feasibility study is to be completed under a separate memorandum of understanding, with start-up for the one million tonne per annum plant to be based at a special industrial zone at the port town of Duqm expected in 2019.