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BP signs $16b gas project in Oman

The Khazzan gas project, which aims to extract around one billion cubic feet (bcf) per day of gas from deep under central Oman, is a showcase for BP’s tight gas extraction technology and output will go towards meeting Oman’s growing energy needs.

“Today’s signing is an important step in the Sultanate of Oman’s plans to meet growing demand for energy over the coming decades and to contribute to economic development in Oman,” Oman oil and gas minister, Mohammed Al Rumhy, said in a statement after the signing in Muscat.

“The Khazzan project is the largest new upstream project in Oman and a pioneering development in the region in unlocking technically challenging tight gas through technology.”

BP has already spent hundreds of millions of dollars on the project since winning the concession in 2007. It expects total investment of around $16 billion for the full field development, equivalent to about a fifth of Oman’s current annual economic output.

“This enables BP to bring to Oman the experience it has built up in tight gas production over many decades,” BP Chief Executive Bob Dudley said in the joint statement.

Construction is expected to begin in 2014, with first gas expected in late 2017 and plateau production of around 1 bcf, or 28.3 million cubic metres, per day expected in 2018.

This level of production would be enough to meet around a third of the country’s current domestic gas needs. But Omani energy demand is rising rapidly and Muscat also hopes to import Iranian gas in a 25-year deal signed in August.

“The country needs the gas to develop its economy,” Al Ruhmy told journalists. “Our needs for gas increase day by day.” BP, which will operate the project, expects to develop around seven trillion cubic feet of gas in the Khazzan project, and to pump around 25,000 barrels per day of gas condensate, a light oil, from the field.