Oman awards Blocks 51, 65 to Oxy, OOCEP

Muscat, Dec 16 – Occidental of Oman, the local subsidiary of Occidental Petroleum (Oxy), yesterday signed Exploration and Production Sharing Agreements (EPSA) for two new hydrocarbon blocks, effectively ramping up its expanding portfolio of upstream investments in the Sultanate.
Under the EPSA pacts, Oxy Oman acquires a 100 per cent interest in Block 51, covering a 10,133 sq km area in the northeast of the country. Separately, a joint venture of Oxy Oman and Oman Oil Company Exploration & Production (OOCEP) has been awarded Block 65, a small 1230 sq km concession located in the interior of Oman.
Dr Mohammed bin Hamad al Rumhy, Minister of Oil & Gas, signed the agreements on behalf of the Omani government. Oxy was represented by its Executive Vice-President, while OOCEP — the upstream arm of Oman Oil Company — was represented by its Executive Managing Director, John Malcolm.

Dr Salman bin Mohammed al Shidi

Giving details about the two pacts, Dr Salman bin Mohammed al Shidi, Director General of Management of Petroleum Investments at the Ministry, said the two blocks will attract combined investment commitments of around $65 million over the next six years. It includes a commitment of $38 million in the first phase towards seismic analysis of existing seismic data, the shooting of additional 3D seismic, and the drilling of exploratory wells.
“Hopefully, with the additional seismic acquisition and geological studies, they will be able to find more prospects that will allow them to drill a total number of 14 wells — five in Block 51 and nine in Block 65 — over the two phases,” he said.
Significantly, the two blocks are prospective for both conventional and unconventional resources. Both were among acreage offered for investment as part of the 2017 Oman Licensing Bid Round.

As part of its commitments towards Block 51, Oxy Oman will undertake geological studies to analyse existing seismic data and drill two exploratory wells as part of an estimated $6 million investment in the first phase. In the second phase, the company has committed a further $14 million to, among other things, acquire 400 sq kilometres of 3D seismic, and drill three additional oil and gas wells. Block 65 — owned by the joint venture of Oxy Oman (73 per cent) and OOCEP (27 per cent) — will be operated by the
former, although the agreement includes a provision for the latter to have role as joint operator as well.
OOCEP’s participation in the JV, according to Dr Al Shidi, follows a roughly two-year study of Block 65 during which the state-owned E&P firm also committed to drill a well targeting unconventional resources.
“OOCEP was successful in carrying out the study programme, at the end of which, the block became open for us to market, and indeed OOCEP in partnership with Oxy, was awarded the block,” he added.
According to the ministry, there are two plays within this block: the first is a conventional oil and gas within the Natih and Shuaiba formations. The second play is the Natih E unconventional oil play. Wells drilled in the concession include the Karam-1, which uncovered a significant find in Natih Formation (Natih A/B), while the Al Shreega-1 well encountered a thin oil column in the Natih A. Oil shows were observed in the UER, Natih and Shuaiba formations.