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BP to sell 20 per cent stake in Oman‎’‎s Block 61 to PTTEP for US$2.6bn

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 operator of the block, holding a 40 per cent interest.‎

‎Subject to 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 availability of feedstock supply 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.‎

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 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.‎

BP Oman 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.”‎

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.

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