Oman Oil Company Seeks $1 bn Funding for Khazzan Tight Gas Project
Oman Oil Company is looking for a $1 billion loan to fund mainly to fund the second phase of Khazzan tight gas project.
Company’s chief executive Issam al-Zadjali told Reuters on Thursday that Oman Oil is seeking the loan from banks in Oman to finance one of its subsidiaries, Oman Oil Company Exploration and Production (OOCEP), which is a partner in the tight gas project.
The company last month signed an agreement with Britain's BP to develop the second phase of Khazzan, taking the estimated investment in the project to $16 billion.
BP is the operator of Block 61 with a 60 percent interest and Oman Oil, through OOCEP, holds the other 40 percent.
The Khazzan reservoirs in Block 61 represent one of the Middle East’s largest unconventional tight gas accumulations, with the potential to be a major new source of gas supply for Oman over many decades. Production from Khazzan will make a significant contribution to ensuring continuing stable and long-term domestic supplies of gas for Oman. According to BP, combined plateau production from Phases 1 and 2 is expected to total approx. 1.5 billion cubic feet of gas a day (bcf/d), equivalent to around 40 percent of Oman’s current total domestic gas production.
In February, BP and Oman Oil signed a heads of agreement with the Omani government committing to amend the Oman Block 61 exploration and production sharing agreement (EPSA), extending the licence area of the block and enabling a further development of the major Khazzan tight gas field.
Under the amended EPSA, the extension will add a further over 1000km2 to the south and west of the original 2,700km2 Block 61. The extension will allow a second phase of development, accessing additional resources in the area that have been identified by drilling activity within the original block. Development of this additional resource is subject to final approval of the government of Oman and of BP; both expected in 2017.
Subject to completion of the agreements and final sanction, the new Khazzan Phase 2 project will come on stream from 2020. The estimated cost for developing Phase 1 and the Phase 2 extension is around $16 billion.
According to Reuters, Oman Oil was talking to both local and international banks about the loan, al-Zadjali said.
Last week, BP Oman said the project is 65 percent complete.