MUSCAT -- The Sultanate's efforts to boost oil output received a shot in the arm yesterday with Occidental of Oman, Inc (Oxy) -- the country's second biggest oil producer -- announcing plans for the commercialisation of its Block 27 (Wadi Aswad) concession, with production scheduled to start next July.
The announcement was made at a ceremony held at the Grand Hyatt Hotel yesterday, attended by Nasser bin Khamis al Jashmi, Under-Secretary of the Ministry of Oil & Gas. In welcome remarks, Al Jashmi hailed the commercialisation of Block 27 as an "another milestone in a remarkable partnership" between the Government and Oxy.
"Today we witness the commercialisation of Block 27, a step which does not only add another bright page to Occidental's history in Oman, but also reinforces our Government's commitment to partnership with foreign investors," Al Jashmi said. "This project derives its significance from the opportunity it will create to explore for and develop a cluster of small accumulations along the new production infrastructure.
In the aggregate, these accumulations can make a valuable contribution to the increase of oil and gas production in Oman. We are looking forward to share the benefit of this project with Occidental, and we are certain that with our continuous cooperation with Occidental we can realise our aspirations."
In a presentation, Occidental's President & General Manager, James Eastlack, said the commercialisation of Block 27 would initially focus on the Khamilah field with estimated reserves of 3.04 million barrels of oil (mmbo), although estimates of original oil in place are as high as 22 mmbo. The development plan calls for the drilling of five new producer wells, in addition to the existing two.
Earlier, the Under-Secretary praised Oxy's role in the development of the Sultanate's oil and gas sector during its 26 years in Oman. "Its contribution to the increase of oil and gas production, most recently through the completion of the Northern Oman Gas Project and the start-up of the strategic Mukhaizna Field development, demonstrates its commitment to achieve sustainable growth that is both economically and environmentally sound."
The Government, Al Jashmi stated, is keen to encourage investment in the oil and gas sector by creating a "good fiscal climate" beneficial to both the investor and the resource holder. "This in turn requires a careful balance between our need to develop a forward looking oil and gas industry that is sensitive to issues of the environment in which the investor operates and our desire for income generation projects with foreign investors. In this, a number of measures, including attractive natural gas pricing, financial incentives through rapid cost recovery and profit sharing schemes are in place."
Acquired in June 1998, Block 27 is jointly owned by Occidental of Oman (65 per cent) and Mitsui E&P Middle East. The onshore block adjoins Oxy's highly productive Block 9 concession, which presently yields around 64,000 barrels per day of oil and 120 million standard cubic feet of gas/day. Total daily production from this block is equivalent to around 85,000 barrels of oil.
By Conrad Prabhu
© Oman Daily Observer 2005
