The Petroleum Development Oman (PDO) has signed a $600 million pact with Indonesia-based oil and gas leader MedcoEnergi to continue developing the Karim Small Fields (KSF) project in southern Oman, a report said.
The contract builds on an existing contract from 2006, added the Oman Observer report.
The agreement was signed by Raoul M. Restucci, managing director of PDO and Lukman Mahfoedz, president director & CEO of the MedcoEnergi.
Key terms defined in the KSF Amendment include an exploration programme which includes three wells in the first two years, a 3-tier service fee scheme based on level of production costs that will yield better operation economics, and a reward mechanism upon successful exploration activities as measured by additional contingent resources.
The sum of $600 million covers the first five years from 2016-2021, when around 100 new wells are expected to be drilled, the report said.
The value should then increase by $80-130 million per year depending on variables such as the production target and budget, according to the report.
“This signing represents a new way of working between PDO and MedcoEnergi, with our current agreement being amended to create a true business alliance. What we are doing is leveraging the fundamental strengths of both parties and moving towards a deeper, stronger partnership to deliver long-term value for PDO and Oman,” Restucci was quoted as saying in the report.
PDO hopes that the renewal of the partnership will help to increase KSF production from the current 17,500 b/d of oil per to at least 20,000 b/d over the next few years through secondary recovery, such as water flood, full field application of cyclic steam, enhanced oil recovery, re-instatement of unconnected fields and more exploration and appraisal, according to the report.
Mahfoedz said: “We are very pleased to have the KSF Contract amended and restated with a lot of improved terms. We believe that this additional 25-year contract period demonstrates our success in the last nine years of diligent and successful effort in doubling the production.”
“We are looking forward to working together with the Government of Oman and PDO in the next 25 years with the objective of increasing production, executing exploration programmes successfully and maintaining safe operations.”
“Our operations team, which comprises of over 80% Omanis, has been working extensively to add value to our international operations and to support the Company’s business strategy in strengthening the portfolio of producing assets. In the future, we plan to extend participation of our Omani staff, not only in Oman but also in our other operation areas globally,” he added.
As operator in Karim Small Fields, MedcoEnergi holds 51% effective participating interest, with the remaining balance held by Kuwait Energy Company (KEC), two local Partners and Oman Oil Company Exploration & Production (OOCEP).
Source: Trade Arabia