bp to sell 20% stake in Block 61 in Oman to PTTEP for $2.6bn

bp, through its subsidiary BP Exploration, has agreed to sell 20% of its participating stake in Block 61 in Oman to PTT Exploration and ‎‎Production (PTTEP) for $2.6bn.

The deal is subject to approval from the Sultanate of Oman and bp’s partners and is expected to be closed this year.

Of the total consideration, $2.45bn is payable at the deal’s closure and a contingent payment of $140m will be paid on pre-greed future conditions.

Following the deal’s closure, bp will own a 40% stake in Block 61, while Oman Oil Company (OQ) and Petronas will own a 30% and 10% stake, respectively.

bp will also remain as the operator of the block.

bp CEO 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.”‎

Located in central Oman, Block 61 covers 3,950km² of area and is claimed to have the largest tight gas development across the Middle East. The block is said to have the capacity to deliver nearly 35% of the total gas output in the country.

There are two phases of development situated at the block already including Khazzan and Ghazeer which started production in 2017 and last October, respectively.

The combined daily production capacity of these two developments is 1.5 billion ft³ of gas and more than 65,000 barrels of condensate. The target is to develop a total of 10.5 trillion ft³ of gas resources.

The gas produced from the block is consumed domestically through the country’s national gas grid.

The investment is expected to immediately increase PTTEP’s petroleum reserves and sales volumes.

PTTEP CEO Phongsthorn Thavisin said: “Since 2019, PTTEP has invested in key assets in Oman including PDO (Block 6), the largest onshore oil field in Oman, and Oman LNG, the only LNG gas liquefaction complex in the country.

“The investment in Block 61 is aligned with PTTEP’s direction of growth, focusing on highly prolific areas, and supports our strategy towards gas value chain investments as gas produced from the block will boost availability of gas supply for Oman LNG.

“This successful acquisition will further strengthen PTTEP’s foothold in Oman in the long run and pave the way for future investments in the Middle East.”