Norway’s DNO to relinquish Block 8, exit Oman

MUSCAT, MARCH 18 –
Norwegian oil and gas firm DNO says it plans to relinquish its flagship asset in Oman — Block 8 offshore Musandam — home to Oman’s only offshore producing fields. The move also means that the Oslo-headquartered international upstream energy firm is preparing to bow out of the Sultanate, having relinquished its portfolio of three other exploration blocks over the past couple of years.
The announcement came in DNO’s Annual Report for 2017 issued last week. It comes on the heels of DNO’s revelation that its relinquishment of the Block 36 exploration asset in the southwest of the Sultanate has been finalised and completed.
They were part of a flurry of relinquishments that included assets in neighbouring
United Arab Emirates (UAE), attributed to DNO’s ongoing strategy of “high-grading” its portfolio.
“At Block 8, DNO operates Oman’s only producing offshore fields, Bukha and West Bukha, where gross production in 2017 totalled 4,484 barrels of oil equivalent per day (boepd) [2,242 boepd on a Country Working Interest basis],” said DNO in its Annual Report.
“Country Working Interest reserves and contingent resources at Block 8 were written down to zero at yearend 2017 since the Company plans to relinquish the asset prior to expiry of the license on 3 January 2019,” it stated.
Hydrocarbon production from Block 8 totalled 1.6 million barrels of oil equivalent (MMboe) in 2017, with a cumulative production of 89.5 MMboe since the West Bukha field came into operation in 1994 followed by Bukha in 2009.
Output from Block 8 has been on the downtrend over the past several years from 15,678 boepd in 2014 to 8,193 boepd in 2015, slumping further to 5,325 boepd in 2016. Last year, volumes dipped to 4,484 boepd, roughly split even between oil and gas.
Seeking to bolster production, DNO spudded the West Bukha-5 sidetrack well in early 2017, as well as planned to reinstate the Bukha-1 subsea well in order to double output from the block by the end of 2017. Those efforts failed to yield any commercial finds.
Block 8 has strategic significance for Oman because its natural gas output is being channelled to the Musandam Power Plant, the first gas-fired Independent Power Project (IPP) established in Musandam.
The 120 MW capacity facility, developed jointly by Oman Oil Company and LG International, came into operation last year.
Over the past two years, DNO has seen its once considerable portfolio of exploration assets in the Sultanate whittle down from four in 2014 to just one presently, viz Block 8.
Previous licenses Block 30 and 31 were relinquished in 2015 as part of the company’s “consolidation and rationalisation” strategy. This was followed by Block 36 last year.
“In 2017, three licenses were relinquished as part of the continuous high-grading of the Company’s portfolio.
This included Saleh and RAK Onshore in the United Arab Emirates and Block 36 in Oman,” the company added in its Annual Report.