) has inked a 30-year agreement with the government of Oman
relating to the drilling of the Khazzan tight gas project.
BP intends to drill about 300 wells to extract gas confined in
the depths of the Omani desert over the next 15 years. The
company has proposed to invest $16 billion in the project,
including about $1.5 billion already spent.
Located in the South of Block 61, the Khazzan project is expected
to yield its first gas in late 2017, while the construction is
scheduled to commence in 2014. The gas production is expected to
plateau in 2018. The project seeks to pull out about 1 billion
cubic feet per day of gas from 4,500 meters deep sandstone in
The Khazzan endeavor will witness the implementation of some new
technology. Being a tight gas project, BP has developed some new
technology including horizontal wells and fracking to flush out
gas from deep limestone.
The revised exploration and production sharing agreement and a
gas sales agreement is initially for 30 years. It also has
provisions for further evaluation of additional gas resources
within Block 61, which will likely be developed in the ensuing
BP will operate the project with a 60% stake, while the remaining
40% will be held by state-owned Oman Oil Company Exploration
& Production. The investments in the project will be made on
the basis of their holdings.
The project is crucial for the growth of Oman's economy, where
the energy demand is gradually increasing and oil reserves are
exhausted. The country is looking at various options to fulfill
its energy demand. In Aug 2013, a deal to import oil into the
country was signed with Iran.
BP carries a Zacks Rank #3 (Hold). Some better-ranked stocks in
the oil and gas sector include
Harvest Natural Resources Inc.
Abraxas Petroleum Corp.
). All these stocks hold a Zacks Rank #1 (Strong Buy).
ABRAXAS PETE/NV (AXAS): Free Stock Analysis
BP PLC (BP): Free Stock Analysis Report
HARVEST NATURAL (HNR): Free Stock Analysis
TESCO CORP (TESO): Free Stock Analysis Report
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