Global oil giant BP has signed a deal with the Omani government and the state-owned Oman Oil company to develop the second phase of the Khazzan gas field project in the license area of Block 61, extended under the amended exploration and production sharing agreement until 2017, reported Gulf Business. The estimated cost for the project’s Phases 1 and 2 is around $16b.

The second phase of development will access additional resources in the area that have been identified by drilling activity and it is expected to come online in 2020. In combination with the Phase 1 of the block, sanctioned in December 2013 and scheduled to deliver first gas in 2017, it is designated to provide in total 1.5bcf/d of gas, which is equivalent to 40% of Oman’s current overall domestic gas production. It will involve construction of a three-train central processing facility and drilling around 325 wells over the next 15 years. The two phases are to develop around 17.5tcf of the country’s overall recoverable gas resources.

Production from the Khazzan project will make a significant contribution to ensuring continuing stable and long-term domestic supplies of gas for Oman, the Times of Oman informed. BP Group CEO, Bob Dudley, said that “Khazzan is a major resource with the potential to produce gas for Oman for decades. This expansion of its development will build on the success we are already seeing in our work on the first phase.” BP had drilled and completed 27 wells from 2007, when the first agreement was signed, to the end of 2015.

The Khazzan reservoirs in Block 61 represent one of the Middle East’s largest unconventional tight gas accumulations, with the potential to be a major new source of gas supply for Oman. BP is the operator of Block 61 with a 60% interest, leaving Oman Oil with the remaining 40%.