bp has agreed to sell a 20 per cent participating interest in Oman’s Block 61 to Thailand’s national petroleum exploration and production company, PTT Exploration and Production Public Company Limited (PTTEP), for a total consideration of $2.6 billion. Following completion of the sale, bp will remain operator of the block, holding a 40 per cent interest.
Subject to approval from the Sultanate of Oman and partners, the deal is expected to complete during 2021.
The agreed total consideration of $2.590 billion comprises $2.450 billion payable on completion (subject to final adjustments) and $140 million payable contingent on pre-agreed future conditions.
Block 61, covering around 3,950 square kilometres in central Oman, contains the largest tight gas development in the Middle East. The block has already had two phases of development – Khazzan, which began production in 2017, followed by Ghazeer in October 2020.
These two developments, targeted at developing a total of 10.5 trillion cubic feet of gas resources, have a combined daily production capacity of 1.5 billion cubic feet of gas and more than 65,000 barrels of condensate. Gas from Block 61 is exported for domestic consumption into Oman’s national gas grid, while also boosting availability of feedstock supply for Oman LNG.
Following the completion of the deal, participating interests in Block 61 will be: bp, 40 per cent; OQ, 30 per cent; PTTEP, 20 per cent; and PETRONAS, 10 per cent.
Chief Executive Officer of bp, Bernard Looney, said that the company is pleased to welcome PTTEP to the successful Block 61 partnership.
“Block 61 is a pioneering development that has applied leading techniques and technologies to maximise efficiency and minimise emissions,” Mr Looney said.
“We are committed to bp’s business in Oman – this agreement allows us to remain at the heart of this world-class development while also making important progress in our global divestment programme.”
bp is targeting divestment proceeds of $25 billion by 2025. Most recently, the $5 billion sale of bp’s petrochemicals business to INEOS completed at the end of 2020.
bp has had an upstream presence in Oman since 2007 when the original production sharing agreement (PSA) for Block 61 was signed. Beyond Block 61, bp and Eni signed a PSA for Block 77 in 2019. bp Trading & Shipping also purchases LNG from Oman LNG under a seven-year deal that started in 2018.
bp Oman Vice President, Yousuf Al Ojaili, also commented: “We look forward to working closely with PTTEP, our other partners, and the Government of Oman on the continued success of Khazzan and Ghazeer, and to explore further opportunities in Block 61.”
“We remain very much committed to our strategic partnership with Oman. We will continue to support critical national energy infrastructure for the Sultanate through Block 61, invest significantly in local companies and Omani talent, and deliver an ambitious social investment programme,” he said.
In 2020, Omanisation in bp Oman reached around 85 per cent and Block 61 spend with Omani-registered companies exceeded $610 million.