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Oman Business News

Strategy to boost output from Oman oil exploration Block 8

Musandam Oil and Gas Company (MOGC), a newly established Omani firm that has taken over operation of Block 8 off Oman’s Musandam Peninsula, plans to chalk out a five-year strategy to ramp up production from the Sultanate’s only producing offshore fields.
Associated gas, crude and condensate from the Block’s West Bukha and Bukha fields have been declining in recent years — a downtrend that MOGC, a wholly owned subsidiary of Oman Oil Company Exploration & Production (OOCEP), wants to arrest and reverse as the new 100 per cent owner and operator of the licence.

On Thursday, Norwegian energy firm DNO AS (along with its 50 per cent equity partner LG International) handed over operatorship of Block 8 upon the expiry of a 30-year Exploration and Production Sharing Agreement (EPSA) covering the ownership and operation of the concession.

At a formal handover ceremony, high level officials of OOCEP and its subsidiary MOGC, made clear their intent to revitalise the Block, which serves as a source of natural gas for Musandam’s first Independent Power Project (IPP) at Tibat. Crude oil and condensates from Block 8 are also exported via an offshore terminal to international markets.

In comments to journalists, MOGC’s newly appointed Acting Managing Director Mahmoud Abdullah al Hashmi, said: “Our strategy for 2019 is to undertake a full study on the fields, see what is there, and then put together a 5-year strategy for the development of the Block. So in 2019, the focus will mainly be on a study that looks for quick wins to maintain production, and from 2020, we will start working with the Ministry of Oil & Gas on a strategy to boost production.”

Output from Block 8 has been on the downtrend over the past several years from 15,678 barrels of oil equivalent per day (boepd) in 2014 to 8,193 boepd in 2015, slumping further to 5,325 boepd in 2016. In 2017, volumes dipped to 4,484 boepd, roughly split even between oil and gas. Current production averages 15 million standard cubic feet per day of gas and 1,500 barrels per day (bpd) of liquids, according to Al Hashmi.

With the acquisition of Block 8 through its Special Purpose Vehicle MOGC, Oman Oil Company E&P (OOCEP) also makes its debut as the operator of an offshore concession in the Sultanate. The company, which is the upstream arm of Oman Oil Company (OOC), also currently operates Blocks 60 and 48 onshore Oman. It also represents the parent company’s investments in a substantial portfolio of local and international licenses.

Earlier, in brief comments during the handover ceremony, Salim bin Nasser al Aufi, Under-Secretary of the Ministry of Oil & Gas, congratulated all of the parties involved in ensuring the smooth transition from incumbent operator DNO to Musandam Oil & Gas Company (MOGC). He also underlined the need for viable solutions to revive Block 8’s flagging output.

“We do have a challenge in the Block and need to how we can grow production,” said Al Aufi. “The team has been already working on this issue and the ideas seen are encouraging. Some ideas build on the previous ideas proposed by DNO, while the others are new. Of course, we need to work them out and make sure we support them financially, technically, and so on. The challenge for us is to make sure we continue this field. It is declining, but we need to revive it. I think the team will do that exercise, and it looks like it will be in good hands.”
  • Musandam Oil and Gas Company
  • Block 8
  • Offshore
  • Oil Production
  • Oman
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