Project cost at Khazzan field cut by 40 per cent

MUSCAT: The Khazzan project has reduced the cost of drilling wells by 40 per cent, said Salim bin Nasser al Aufi, Under-Secretary of the Ministry of Oil and Gas. At a press conference held on the occasion of the start of production at the project on Tuesday, Al Aufi said the first phase of the project was completed at a cost of $1.7-1.9 billion as against the estimated cost of $2.1 billion. He also said the project was completed ahead of its scheduled time of November, thanks to the efforts made by BP operator at Khazzan field under a joint agreement with Oman Oil Exploration and Production Company. According to him, the first train of the project will have the capacity to carry 500 million cubic feet of gas per day.

The second train, with the same capacity, will be completed by the end of this year, taking the total production from the field to one billion cubic feet per day.
With the operation of the second phase of Ghazair Field, the gas production will touch 1.5 billion cubic feet per day, he said. The gas export station at Khazzan field, he said, has become a reality.
A total of 61 holes have been drilled so far, while the drilling process is continuing at the rate of 200 holes in the first phase and 100 in the second.
Al Aufi noted the bulk of the production from the project will be used for local consumption and a small percentage for the LNG plant in the Wilayat of Sur for meeting its export requirements.
He said the Sultanate’s gas requirement is 3.5 billion cubic feet, which is equivalent of one-third of the daily production of the project.
Thirty per cent of the gas production from Khazzan field will go to the power sector and 15 per cent to industrial projects. Some percentage will go to the oil sector for producing electricity.
He said the country’s gas reserves now stood at 20 billion cubic feet.
Despite the flow of gas from the Khazzan project, Oman will continue to import gas from the Dolphin Gas project to meet the needs of industrial projects and the industrial zone in the Wilayat of Suhar.
Asked about the gas requirements of projects, he said the problem was not the quantity, but the price desired by the projects which is not commensurate with the price of $3 set by the government for the power sector along with a 3 per cent increase every year.
For the industrial sector, Al Aufi said the price depends on their ability to pay more, but the minimum is $3. “Upper limit is negotiable as it depends on the project and the ability of the company to buy gas in bigger quantities.”
Yousef bin Mohammed al Ojaili, Chief Executive Officer of BP Oman, described the project as the largest of the seven projects that BP is operating this year.
Its operations in the country include the development and production of gas, the supply of ship fuel and lubricants, and the provision of petrochemical technology and raw material for aluminium smelter.
He said the total cost of the project will reach $16 billion by the end of 2043, while its capacity will reach seven trillion cubic feet, besides 3.5 trillion cubic feet from Ghazeer field.
The project will provide oil condensates, which is expected to reach 25 million barrels per day when the production from Khazzan project reaches one billion cubic feet by the end of 2017.
He said the Omanisation rate at the project was close to 70 per cent before start of the operation.
It has been planned to increase this percentage by training Omanis inside and outside the country.
The company is working on the development of a social investment programme, where it has completed the implementation of 73 programmes benefiting 33,000 Omanis, he said.
John Malcolm, General Manager, Oman Oil Exploration and Production Company, said exporting the first shipment of gas from Khazzan project before the scheduled date of delivery is considered an achievement in the company’s business. — ONA