New subsidiary to operate Block 49 onshore Oman

MUSCAT, NOV 11 - Swedish upstream energy firm Tethys Oil has announced the establishment of a new local subsidiary to operate Block 49 onshore Oman, an Exploration and Production Sharing Agreement (EPSA) for which is scheduled to be signed later this week. Block 49 is one of four blocks offered as part of the 2016 Oman Licensing Round, exploration licenses for which are due to be formally awarded by the Ministry of Oil & Gas on Tuesday. Block 49, a sprawling 15,439 sq km swathe of sand dunes in the southwest of the country on the Sultanate’s border with Saudi Arabia, has been described by Tethys Oil as “a prospective but still rather unexplored area”. The block will be operated by Tethys Oil Montasar Ltd, a wholly owned subsidiary of the Swedish oil firm. It will also hold 100 per cent of the licence interest in the concession.

With the imminent acquisition of Block 49, Tethys Oil is set to grow of portfolio of investments in Oman’s upstream energy sector. The company currently has a 30 per cent interest in Blocks 3 & 4, located in the eastern part of the Sultanate and covering an area of 29,130 sq km. Independent oil and gas exploration and production company CC Energy Development (CCED) is the operator of Blocks 3&4 with a 50 per cent interest. The remaining 20 per cent is held by Mitsui. Crude production from the two blocks averaged 40,400 barrels per day in 2016.

As the operator of Block 49, Tethys Oil Montasar Ltd aims to leverage the Group’s growing international expertise in upstream energy markets in harnessing the hydrocarbon potential of this relatively unexplored concession, according to Tethys Managing Director Magnus Nordin.

“Block 49 is the kind of opportunity Tethys Oil has been pursuing for some time. The Block covers an area with known oil shows, has a limited initial financial risk and offers several as yet immature but potentially very prolific play concepts. After more than ten years in Oman, Tethys Oil has built a strong technical team. As operator of the block, we are confident our Omani experience will be well suited to make Block 49 into a success,” Nordin said in a statement announcing the award of the block to Tethys Oil.

According to the Managing Director, the EPSA pact for Block 49 will cover an initial exploration period of three years with an optional extension period of another three years. Commitments during this initial phase will include geological studies, seismic acquisition and processing and exploratory drilling. In the event of a commercial oil or gas discovery, the EPSA will be transformed in to a 15-year production licence which can be extended for another five years.

Additionally, a commercial discovery will also entitle Oman Oil Company Exploration & Production (OOCEP) — the upstream arm of Oman Oil Company (OOC) — the right to acquire up to a 30 per cent interest in Block 49 against refunding of past expenditure.

Significantly, Block 49 is home to Dauka-1, the first-ever oil exploration well drilled in the Sultanate in 1955. Dauka-1 was among 30 wells drilled in Dhofar and 3 wells drilled in Marmul during the 1955-58 timeframe by US firm Dhofar-Cities Services Petroleum Corporation, which had the concession at the time to explore for hydrocarbons in the Sultanate.

Tethys Oil is optimistic about prospects for Block 49. The company is set to gain access to more than 11,000 km of 2D seismic data acquired by previous operators. Oil shows have also been reported in some of the nine wells drilled within the block in the past.

Conrad Prabhu