On Thursday, Oman’s Ministry of Oil and Gas signed an Exploration and Production Sharing Agreement (EPSA) with a partnership of Medco Arabia Ltd (a wholly-owned subsidiary of Jakarta-based PT Medco Energi Internasional Tbk) and local Omani firm Intaj LLC, covering Block 56 onshore Oman. Medco, with a majority working interest, is also the operator of the 5,800 sq km concession.
The MedcoEnergi partnership takes over from the previous operator — Australia-headquartered Oilex Ltd — who had relinquished the block in 2010 after completing its work programme.
Underscoring Block 56’s prospectivity is its location flanking the prodigious Oman Salt Basin, which has a stock-tank-oil-in-place (STOIIP) of nearly 16.5 billion barrels.
Petroleum Development Oman (PDO), the nation’s upstream flagship, has a number of producing oilfields within the Basin.
According to MedcoEnergi, Block 56 has an estimated oil in place of 370 million barrels, with previous operators having already identified three technical discoveries and a further six other potential prospects. These include the Sarha-1, Ghadaq-1 and Al Jumd-1 discoveries which the Oilex Ltd joint venture had announced following the completion of its work programme. For its part, MedcoEnergi has pledged to drill three exploration wells during the first exploration phase.
With the acquisition of Block 56, MedcoEnergi effectively expands its presence in the Sultanate. The firm’s local subsidiary, Medco Oman LLC, is currently the operator of the Karim Small Fields (KSF) under a 10-year Exploration & Production (E&P) Service Contract Agreement concluded with the Omani government. It was the first agreement of its kind to have been signed by the government with an international operator.
The pact solemnised the outsourcing by PDO of the Karim Small Fields to MedcoEnergi as a third party contract operator to operate the cluster of 18 mature oilfields on its behalf with the objective of arresting decline, increasing production and exploiting the potential of the fields. MedcoEnergi took full-field responsibility over 115 wells initially producing 9,000 barrels per day (bpd) of oil in August 2006. In addition to the service contract, MedcoEnergi earns a fee on the production of oil from the field. As of year-end 2013, the Company drilled 33 production wells and succeeded in maintaining the rate of oil output at around 17,500 bpd.
The Karim Small Fields’ location adjoining Block 56 bodes well for MedcoEnergi’s E&P strategy for the newly acquired concession. Aside from similarities in the geology of the two areas, the firm also sees potential for harnessing operational synergies across the two areas.
Medco Oman has a 51 per cent participating interest in the consortium that won the PDO tender. The other partners are Oman Oil Company Exploration & Production (25 per cent), Kuwait Energy (15 per cent), Vision Oil & Gas (5 per cent), and PetroVest (4 per cent).
Voicing optimism about the potential of its new acquisition, Lukman Mahfoedz, President Director & CEO of MedcoEnergi stated: “Block 56 is one of the biggest exploration acreages in Oman and has a large hydrocarbon potential.
It further asserts our presence in the Middle East & North Africa region, specifically in Oman. I am confident that in this block we can repeat the success story of our KSF operations, given our outstanding operational performance and very good safety track record so far.”
A publicly listed integrated energy company, MedcoEnergi operates a number of oil and gas blocks in Indonesia, as well as several power plants. The company also has interests in coal mining and gas distribution businesses.
Its international portfolio includes assets in Libya, Yemen, Tunisia, Papua New Guinea and the United States, besides Oman. (OEPPA Business Development Dept)
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