Q: How would you describe OQEP’s current strategy?
A: What distinguishes OQEP from other companies is our ability to attract partners, especially IOCs and independents. This didn’t come from nowhere, it comes from the culture we have built within our team to ensure that we are seen as a trusted, reliable partner with strong, local knowledge; both technical knowledge and understanding the way things are run and governed in Oman. Those relationships, our technical, commercial, and operational abilities have positioned us to be where we are today.
With these strengths, we want to continue building new types of relationships which will attract more foreign investment into the country and also allow the transfer of technology, expertise, and the transfer of financing. This all affords us the expertise to promote more exploration activities in Oman, and for that reason the government entrusted OQEP to run its bid rounds.
Q: What is OQEP’s role in running the current bid round?
A: Our role is to do what I described. The government must have seen our ability to partner with international companies, and that’s why it was offered to us. The offer came with an excellent proposition from the government saying: ‘you don’t have to stick to traditional ways of forging petroleum agreements. It could be a combination between [Exploration and Production Sharing Agreements] EPSAs and concession agreements.’ They told us to just think of what it takes to overcome the financial and technical risks to continue exploring and looking for more difficult oil in Oman (MEES, 8 November 2024).
We have at the moment four blocks that are in the market: Onshore Blocks 36, 43A, 66 and offshore Block 18. And of course, the onshore concession areas have more interest than the offshore. But, the interest in the offshore is also very positive compared to our expectations. Things are progressing well.
So that’s one part of our strategy. The other part is now that we have established a strong relationship with many companies in Oman, local and international companies, we wish to establish the same relationships outside the country. We want the same partners to carry us outside the sultanate, and we are evaluating opportunities outside Oman.
Q: Is OQEP interested in being operator at some of the blocks?
A: The focus of our current strategy is that locally in Oman, we would like to operate a bit more. Operatorship gives you strength in terms of going and partnering with other companies. It’s important to have the balance. Outside of Oman our intention is not to be an operator at least for the moment.
Q: Currently your net production is around 230,000 b/d. Do you have plans to grow this further?
A: Absolutely. Our [net] production started from a humble 18,000 boe/d in 2009 to currently about 230,000 boe/d. We intend to go beyond our current 230,000 boe/d. We don’t have a production target at the moment, but I would say we have more financial targets in terms of investments and growth.
We’re looking at things like the balance between oil and gas, ensuring that you have at least 50% gas in your portfolio, and we are aiming for a reserves replacement ratio of about 1:1. We’re looking at balancing investments and partnerships inside and outside Oman.
While we continue to grow, we want to ensure that our debt-to-equity is at an excellent ratio and that we have enough leverage to take out loans if we wish to do so. But most importantly, we want to ensure that we can pay dividends to our shareholders every year.
Q: Turning to your flagship asset in Oman, Block 60. Do you have further plans to expand capacity at the Bisat oil field once the current expansion is complete?
A: Of course. Block 60 is adjacent to Block 48, which we are currently exploring. We have also found some leads within Block 60 itself. We recently made the Gharif north discovery in the block (MEES, 14 March) and while it is too early to speak about it, it looks like a promising prospect.
This new Bisat-C expansion will bring total capacity to 100,000 b/d and is in anticipation that more discoveries would be made. We are also expanding facilities in anticipation that water cut will increase.
Q: How are discussions going with your partner Oxy and the Ministry over expanding the Mukhaizna heavy oil field in Block 53 (see p5)?
A: It is difficult to share any details about it because information is not yet in the public domain. What I can say is that it is very positive. As part of the package to improve production we are working with the ministry to improve fiscal terms. We have to start looking at the fiscal protocols, the petroleum agreements and what is required in terms of changes and so on. It’s one big package.
Q: OQEP is a partner at recent gas discoveries: Shell’s Block 11, Eni’s Block 47, and Oxy’s Block 62. Will these help bring a new phase in Oman’s gas development?
A: At Block 47 we are still drilling. For Blocks 11 and 62, these are important discoveries because Oman does have a number of gas-driven projects in the downstream.
Finding gas in Oman is now more attractive than how it used to be in the past. There was a time where you drilled for oil and if you found gas you assume it’s a bad thing. It’s no longer like that. So, I would say the government will find ways to use any gas discoveries in the downstream projects.
The [1mn t/y] Marsa LNG project [TotalEnergies 80%, OQEP 20%] is a first of its kind in that way (MEES, 7 March). We will monetize our own gas that is produced from Block 10 through the vehicle that was established in Marsa LNG in Sohar, where we will convert it to LNG for bunkering purposes.
It will be commissioned in 2028, so hopefully then it will be right on time for the market, and the forecasts are moving towards that direction. Especially with the fact that you’ve only got such LNG bunkering facilities in Singapore and Rotterdam.
Emissions from the project are almost zero, emission intensity is only 3kg of CO2 equivalent per boe. It’s the first LNG plant to be 100% electrified. Sustainability is at the core of our business. Our carbon emission intensity at the moment is 15kg of CO2 per boe, which is very low (MEES, 25 October 2024). In addition to that, we are looking at installing 60MW of new solar capacity at Bisat hopefully to achieve the 2050 net-zero target that the government has set.
Oman’s energy landscape is changing completely and international partners and IOCs shouldn’t miss that opportunity. Very soon it will be too late.
*Interview conducted by Gulf Analyst James Marriott in Muscat on 15 May.
www.mees.com (Article Sourced Website)
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