Feb 10 2008
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Petroleum Development awards Rima small-fields service contract to Petrogas
MUSCAT -- Petroleum Development Oman (PDO) has awarded a contract to Petrogas Rima LLC (Petrogas) to develop a cluster of 18 small oil fields in the Rima area of south Oman. Oman Oil Company (OOC) will also participate in the service contract as a partner with Petrogas . The contract was awarded on the basis of a highly competitive open tender in which more than 200 companies from both Oman and abroad participated. The 15-year service contract is aimed at raising -- in a quick and cost-effective way -- the production levels of these fields, which contain more than 500 million barrels of oil in the ground and are currently producing about 2,000 barrels of oil per day.
The contract will thus allow PDO to dedicate its resources to the development of its larger fields, which currently account for the vast majority of its oil production, and to the execution of its complex enhanced-oil recovery projects. The contractual objective as well as the tendering strategy that was followed had the full support of all of PDO 's shareholders. PDO Managing Director John Malcolm cited the Rima Small-Fields Service Contract as "another good example of how, with the support of the Government and our private shareholders, we have radically transformed our working relationship with contractors".
He then went on to explain how the contract would give the service provider "a high degree of autonomy, coupled with clearly defined financial incentives, so as to improve the delivery of oil from fields that are too small and too remote to merit PDO 's undivided attention." Mohammed al Barwani, Chairman of MB Holding Company, the parent company of Petrogas , said: "Naturally, I'm very pleased that Petrogas was the winner of this highly competitive tender for the contract. The award of the Rima Small-Fields Service Contract to Petrogas demonstrates that a 100 per cent Omani-owned company has become a mature operator. I'm sure that PDO and Petrogas , together with Oman Oil Company , will work in partnership to deliver excellent results."
As part of the service contract agreement, Petrogas Rima LLC (Petrogas) signed a joint operating agreement with Oman Oil Company (OOC) taking 25 per cent participation interest in the service contract. Ahmed Salim al Wahaibi CEO of OOC , explained that the signing of the joint operating agreement with Petrogas Rima is part of OOC 's strategy to develop and expand its upstream business within the Sultanate and OOC is looking forward to working with Petrogas Rima and PDO on this project. As part of the Rima Small-Fields Service Contract, the contractor will submit a work programme covering all aspects of the cluster's development -- from exploratory appraisal and sub-surface studies to well engineering and facilities construction through to operations and maintenance.
PDO , which retains full accountability for what happens in its concession area, will review and approve the work programme and budget. No sharing of the equity in the field is involved in the agreement. This means that the contractor will receive only financial rewards based on the production levels obtained from the fields covered by the service agreement and on the costs involved in achieving those production levels. A similar service contract was awarded in February 2006 to MedcoEnergi, an Indonesian oil and gas company, and the OOC for the development of a cluster of small oil fields in the Karim area of south Oman.
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