Italy's Eni to explore offshore block in Oman
Italian major has signed an MoU with state-owned Oman Oil Co to explore the Sultanate’s only offshore block for oil and gas reserves, in partnership with OOC subsidiary Oman Oil Company for Exploration & Production (OOCEP)
Italian major Eni has acquired rights over the only maritime block offered during Oman’s latest licensing round, launched late last year, according to a report by Your Oil and Gas News.
The move comes as a considerable fillip to Muscat’s long-standing efforts to find and develop offshore oil and gas reserves. The allocation was made in the context of a broader co-operation agreement with state-owned Oman Oil Co. (OOC).
The block is the only one of four offered during the bid round to have been allocated thus far – presumed to reflect a continued bearishness in the industry rendering investment in Oman’s challenging and dispersed fields relatively unattractive.
The memorandum of understanding (MoU) signed in Milan by OOC CEO Isam al-Zadjali and his Eni counterpart, Claudio Descalzi, called for the two parties to “to explore co-operation opportunities in the oil and gas sector,” according to the report.
It granted the Italian E&P company, in partnership with OOC subsidiary Oman Oil Company for Exploration & Production (OOCEP), exploration rights in Block 52 – with neither the size of the respective shareholdings nor the precise nature of the licence agreement being revealed.
The block covers a 90,760 sqkm area off the Sultanate’s southeast coast and was described in information released by the Ministry of Oil & Gas (MOG) when launching the latest licensing round in October as being primarily an oil target.
As in the rest of Oman’s offshore territory, the area has a long history of unsuccessful exploration. Ireland’s Circle Oil relinquished the licence in 2015 as part of a wider withdrawal from the country in response to the global industry downturn. Previous work had been carried out by the US’ Sun Oil, Amoco – subsequently acquired by BP – and the majority state-owned Petroleum Development Oman (PDO).
The last of these – the government-led joint venture with Royal Dutch Shell that is the Sultanate’s largest oil and gas producer – drilled the only well in the block in 1991.
Al-Zadjali earlier in the year laid out a local expansion strategy for OOCEP calling for partnership with leading IOCs to boost reserves and production from the sultanate’s diverse and complex fields. In April, he signed a heads of agreement (HoA) with Shell for exploration in the 25,600-square km Block 42 in the north-east.
Harnessing Eni’s technical prowess in offshore exploration – demonstrated in the MENA region with the discovery of Egypt’s giant Zohr gas field two years ago – for the Italian company’s first investment in the country was a particular coup.
Descalzi explained the move in the context of a “strategy aimed at diversifying our exploration portfolio across basins with liquid hydrocarbon potential while keeping high-quality stakes throughout the exploration phase”.