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BP to sell $2.6bn stake in Oman’s Block 61 to Thailand’s PTTEP

1 Feb 2021

Global energy giant BP has agreed to sell a 20 per cent participating interest in Oman’s Block 61 to PTT Exploration and Production Public Company Limited (PTTEP) of Thailand for a total consideration of US$2.6bn.

Following the completion of the sale, BP will remain the operator of Block 61, holding a 40 per cent interest.

Subject to the approval from the Sultanate of Oman and partners, the deal is expected to complete during 2021. The agreed total consideration of US$2.590bn comprises US$2.450bn payable on completion (subject to final adjustments) and US$140mn payable contingent on pre-agreed future conditions, BP said in a statement released on its website on Monday.

Following the completion of the sale, participating interests in Block 61 will be: BP (40 per cent); OQ (30 per cent); PTTEP (20 per cent); and Petronas (10 per cent).

PTTEP is Thailand’s national petroleum exploration and production company, with interests in ‎‎15 ‎countries, including Oman.

Block 61, covering around 3,950sqkm 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 10.5tn cubic feet of gas resources, have a combined daily production capacity of 1.5bn 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 the availability of feedstock supply for Oman LNG.‎

BP’s 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.

As per the statement, BP is targeting divestment proceeds of US$25bn by 2025. Most recently, the US$5bn sale of ‎BP’s petrochemicals business to INEOS completed at the end of 2020. BP Oman’s vice-president Yousuf al Ojaili 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,” Ojaili added.

According to the company’s statement, in 2020, Omanisation in BP Oman reached around 85 per cent and Block 61 spend with Omani-registered companies exceeded US$610mn.

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 liquefied natural gas from Oman LNG under a seven year deal that started in 2018.‎

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