PDO signs $600mn deal with Indonesia's Medco
Medco to operate Karim oil fields in Southern Oman for 25 years
Petroleum Development Oman has signed a $500mn deal with Indonesia's Medco Energi Internasional, making it the operator of the Karim oil fields in the South of the Sultanate for an additional 25 years.
The agreement was originally signed by Medco and its partners with Petroleum Development of Oman in 2006 for a period of 10 years, Medco told Reuters in an emailed statement on Wednesday.
The $600mn contract covers the first five years of the agreement from 2016-2021, with around 100 new wells expected to be drilled during that period.
After that, the project would receive additional funding of $80-130mn per year depending on variables such as the production target and budget, accoridng to Time sof Oman.
PDO Managing Director Raoul Restucci told the publication: "This signing represents a new way of working between PDO and MedcoEnergi, with our current agreement being amended to create a true business alliance.
"The purpose of this contract is to maximise, in a safe and sustainable way, production from the KSF cluster, using the resources of MedcoEnergi.
"In the current tough volatile oil price environment, MedcoEnergi has shown itself to be fully committed to continue delivering value in an efficient way with the guarantee of significant investment, further support for In-Country Value (ICV) and without compromising on our overarching priority of safety."
The renewal of this partnership is hoped to increase production from the current 17,500 barrels of oil per day to 20,000 bpd over the next few years.
In order to boost production, secondary recovery methods, such as water flood, full field application of cyclic steam, enhanced oil recovery would be used, followed by re-instatement of unconnected fields and more exploration and appraisal.
The Indonesian exploration and produciton firm holds a 51% effective participating interest in the fields, with the remaining 49% split between Kuwait Energy, Oman Oil Company Exploration & Production and two local partners.
PDO has been working in partnership with MedcoEnergi on KSF to maximise production from a 18 depleting small and marginal fields, which have generated combined revenues of almost $4bn.
But a number of challenges related the viscosity of the oil and the high oil-water ratio in the reservoirs remain.