BP will be selling 20% participating interest in Oman’s Block 61 to PTT Exploration and Production Public Company (PTTEP) of Thailand for a total consideration of $2.6 billion.
Upon completion of the sale, BP will remain a block operator holding a 40% interest. The agreement is expected to be concluded in 2021, Oman News Agency reported (ONA).
The agreed total amount of $2,590 billion is $2,450 billion payable on completion (subject to final adjustments) and $140 million payable on pre-arranged future terms and conditions.
After completion, the participating interests in Block 61 will be: BP, 40%; OQ, 30%; PTTEP, 20%; and Petronas,10%.
Block 61, covering some 3,950 km2 in central Oman, contains the largest gas development in the Middle East. The block has already had two phases of development – Khazzan, which started production in 2017, followed by Ghazeer in October 2020.
These two developments, aimed 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 to Oman's national gas grid for domestic consumption, while at the same time increasing the availability of feedstock for Oman LNG.
BP chief executive officer Bernard Looney said: “We are 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. “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.”
He added: "Confidential BP is targeting divestment revenues of $25 billion by 2025. Most recently, the $5 billion sale of BP's petrochemicals business to INEOS was completed by the end of 2020.
BP Oman Vice President Yousuf al-Ojaili said: "We look forward to working with PTTEP, our other partners and the Government of Oman on the continued success of Khazzan and Ghazeer and exploring further opportunities in Block 61.
"We remain very committed to our strategic partnership with Oman. We will continue to support the Sultanate's critical national energy infrastructure through Block 61, invest heavily in local companies and Omani talent, and deliver an ambitious social investment programme."
He pointed out that Omanisation in BP Oman reached around 85 per cent in 2020 and that Block 61 spent more than $610 million on Omani registered companies.
BP has had an upstream presence in Oman since the signing of the original production sharing agreement (PSA) for Block 61 in 2007. Beyond Block 61, BP and Eni signed a block 77 PSA in 2019. BP Trading & Shipping also purchases LNG from Oman LNG under a seven-year deal that began in 2018.