Oman Oil Co eyes Oman oil, gas block as BG exits

Sun Jun 20, 2010 3:07pm IST

Stocks

   
Rajalakshmi (C), 28, smiles after winning the Miss Wheelchair India beauty pageant in Mumbai November 26, 2014. REUTERS/Danish Siddiqui

Miss Wheelchair India

Seven women from across India participated in the country's second wheelchair beauty pageant, which aims to open doors for the wheelchair-bound in modelling, film and television, according to organisers  Slideshow 

* Govt investment arm in talks to take over Block 60

* Unclear if will be tendered, awarded directly

* Gas prices also a factor in BG exit - source

By Saleh al-Shaibany and Simon Webb

MUSCAT/DUBAI, June 20 (Reuters) - State-run Oman Oil Company (OOC) is in talks with Oman's Ministry of Oil and Gas to take on an exploration block ceded by Britain's BG Group (BG.L), a senior Omani oil official said on Sunday.

Like most of its Gulf neighbours, Oman is short of the gas it needs to meet rapidly rising demand for industry and power. Across the region, governments have embarked on exploiting unconventional gas reserves, such as Oman's tight gas.

The gas is in complex formations that is more expensive to produce than more conventional reserves.

"Oman Oil Company is in discussion with the ministry of oil and gas to take over the BG concession in Oman," Nasser al-Jashmi, undersecretary for oil and gas, told Reuters.

BG pulled out of its deal to develop Oman's oil and gas Block 60 earlier this month to focus on global opportunities elsewhere.

OOC is the government's energy investment arm, and holds both domestic and international oil and gas assets.

It was unclear whether the government would retender the block, which BG signed up to develop in 2006, or whether it would award the acreage directly to OOC. The block covers an area of 1,500 square kilometres at Abu Butabul.

BG had planned to start gas output from the block in 2012 and has already made substantial drilling investment there.

GAS PRICE, BP

Gas prices were also a factor in BG's decision to exit the block, one industry executive involved in the negotiations told Reuters on condition of anonymity.

The government has refused to revise a gas price agreed in 2006, he said. Without a higher gas price, it would have been hard for BG to make returns on the investment needed to produce the tight gas, he added.

British major BP (BP.L) was expected to start output from Oman tight gas fields in August, Jashmi said last month. ???? also said it would start early gas production in August from two fields in block 61. [ID:nLDE64P1E2]

BP has said early output could be between 200 million and 300 million cubic feet per day (cfd).

BP's plans were unlikely to be affected by BG's exit, another Omani oil official said.

"BP has different technologies, different experience," he said. "I think it is happier too with the reserves it has in place in Oman."

Oman has signed production sharing agreements with a number of foreign companies to boost both oil and gas production.

BG was concentrating on discoveries in Brazil, a coal bed methane project in Australia and recent acquisitions in shale gas in the United States, a BG spokeswoman said last week.

"We have decided to end our activity in Oman because we need to prioritise other opportunities across the global portfolio for development," she said. "So we are working with the (Omani) government now to finalise our exit from Block 60." (Additional reporting by Daniel Fineren in London; Editing by Jon Loades-Carter)

Online Grocery Shopping

REUTERS SHOWCASE

Vodafone Tax Dispute

Vodafone Tax Dispute

India advised against challenging Vodafone tax ruling - source  Full Article 

Banking Sector

Banking Sector

India's laggard state lenders face tough sell on capital raising plan  Full Article 

Trade Deal

Trade Deal

WTO postpones trade deal by a day after last-minute objection.  Full Article 

Falling Oil Prices

Falling Oil Prices

Saudis signal no push for oil cut as market to "stabilise itself"  Full Article 

Raising Stake

Raising Stake

Nippon Life to raise stake in Reliance Capital fund unit  Full Article 

Sterilisation Camps

Sterilisation Camps

Sterilisation targets remain in all but name, critics say  Full Article 

Share Buyback

Share Buyback

Samsung Electronics to buy back $2 billion in shares  Full Article 

Microsoft in China

Microsoft in China

Microsoft to pay China $140 million for 'tax evasion'   Full Article 

Flashback: 26/11

Flashback: 26/11

The three-day attack in November 2008 left 166 dead.  Slideshow 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage