Companies sign up for Oman gas deal

OIL DEAL: Occidental Petroleum Corporation and Mubadala Development Company have signed a contract for Oman fields. (Getty Images)

Occidental Petroleum Corporation (OXY) and Mubadala Development Company of Abu Dhabi (Mubadala) have announced the signing of an exploration and production sharing agreement (EPSA) with the Ministry of Oil and Gas in Oman.

Under the terms of the EPSA, the parties will develop four existing gas fields and explore for potential new discoveries in a newly formed contract area in Northern Oman.

The 20-year agreement covers a 2,269 square kilometre area and exploration, appraisal and development activities will start immediately.

Production from the area is expected to begin in 2010 and reach a plateau of about 27,500 barrels of oil equivalent per day by the end of 2011.

Total capital investment in the contract area is expected to be approximately $500 million over the next four years.

In addition to the field developments, this investment will include up to nine exploration wells over a six year exploration period to test the upside potential of the shallow and deep gas plays found in the region.

OXY will serve as operator under the EPSA and hold a 48-percent interest, with Mubadala holding a 32-percent interest and the Oman Oil Company holding the remaining 20 percent.

"We are pleased to expand upon our existing relationship with Oman and look forward to working with our partners to help ensure that future supplies of natural gas will be available to fuel Oman's economic growth," said Dr Ray R. Irani, chairman and CEO of Occidental.

"Signing this EPSA is another important step in the implementation of our growth strategy within the region. The development of the substantial natural gas resources contained within the contract area will create significant value for the people of Oman and for our shareholders."

Khaldoon Khalifa Al-Mubarak, CEO and managing director of Mubadala, added: "The project is another example of Mubadala's strategy of leveraging Abu Dhabi's history and experience as a trusted energy supplier to build a diverse range of energy related businesses in the UAE and internationally."

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