Shell plans to exploit the gas reserves of the Mabrouk field to produce blue ammonia for the local market, a senior official at Shell Oman told local news portal WAF Oman.

Waleed Hadi, Shell’s Head of Operations in revealed that by next year, the company in partnership with the Ministry of Energy and Minerals, will arrive at an agreement to exploit the gas reserves from concession Blocks 10 and 11.

He added that the project may progress from the evaluation stage to detailed engineering studies in 2023 but a Final Investment Decision (FID) will be taken only if the project is found commercially feasible.

But he also said that if the partners are unable to bring the project to “positive commercial results,” alternative ways to exploit the produced gas will be considered.

Salem Al-Awfi, Omani Minister of Energy had told the news portal during the Green Hydrogen Oman conference that Shell is still studying the feasibility of the project in terms of the proposed location in Sur, Sohar or Duqm; location of the carbon storage site, the final cost of the project, whether it will be stored underground or used in another project, and whether the gas will be used to produce ammonia or hydrogen only or both.

The development agreement for Block 10 was signed in December 2021 with Shell owning a 53.45 percent stake, OQ Group owning 13.36 percent, and Total with a 33.19 percent stake. Gas production from the Block is expected to start early next year, the report said.

Last week, Shell Oman had awarded Petrofac three major Engineering and Procurement Services (EPS) contracts for Block 10 of Mabrouk field.

(Writing by Sowmya Sundar; Editing by Anoop Menon)