Tethys Oil acquires majority interest in Oman Block 56

Growing portfolio: Swedish upstream energy firm set to assume operatorship of 5,808 sq km licence in southeast Oman

Ramping up its presence in Oman’s upstream energy sector, Swedish firm Tethys Oil has acquired a majority interest in Block 56, a promising onshore concession located in the southeastern part of the Sultanate. Following the transaction, Tethys Oil is set to take over operatorship of the block, adding to an expanding portfolio of operated assets in the Sultanate.

It follows an agreement reached by the energy firm’s wholly-owned subsidiary Tethys Oil Oman Onshore Limited with incumbent operator Medco Arabia Ltd, a 100 per cent owned subsidiary of PT Medco Energi Internasional, a publicly listed Indonesian oil and gas company.

The pact allows for Tethys Oil to acquire an additional 45 per cent interest in the licence covering Block 56, up from 20 per cent originally. The deal, once ratified by the Omani government, will effectively raise Tethys Oil’s interest in the licence to 65 per cent. Significantly, Medco Arabia, which retains a five per cent interest in the licence, will relinquish operatorship of the block to Tethys Oil Oman.

Block 56, spread over an area of 5,808 sq km, is located some 200 km south of the adjoining Blocks 3 & 4, in which Tethys Oil has a non-operating 30 per cent interest. Output from the two blocks presently average around 45,000 barrels per day (bpd).

Tethys Oil says it is optimistic about Block 56’s hydrocarbon prospects. Of 11 wells drilled to date in the Block, all but one have encountered oil or oil shows, although none have been determined to be commercial.

“Testing operations of three previously drilled wells were successfully completed in the first quarter 2020. One of the wells confirmed the presence of an active petroleum system with a crude oil quality of 20-25 degrees API and medium viscosity, although the commercial viability is yet to be determined,” said Tethys Oil in a statement.

The latest deal, announced over the weekend, marks a year since Tethys Oil first acquired a 20 per cent interest in Block 56 following an agreement with Biyaq Oil Field Services, an investor in the licence. Upon the finalisation of the most recent pact, Biyaq will hold 25 per cent and Intaj LLC and Medco Arabia Ltd 5 per cent apiece. The transaction also commits Tethys Oil to providing additional compensation to Medco Arabia in the event of a declaration of commerciality.

CONRAD PRABHU

@conradprabhu