BP’s Khazzan gas project in Oman nears completion of phase one

Date: 24 October 2016

MUSCAT, Sultanate of Oman - BP Oman announced that phase one of its massive Khazzan natural gas project is 80 percent complete and on track to deliver first gas near the end of 2017.

Located on a previously undeveloped desert site 350 kilometres south of Muscat, work on the Khazzan tight gas project began in 2014 and the completed development will eventually contribute roughly a third of Oman’s natural gas supply.

The vast majority of the infrastructure is already in place including 56 kilometres of roads, several thousand metres of power lines (including broadband networks) and a 60 kilometre water pipeline from Hanya. Foundations and structures have also been put in place and equipment installation is in progress for the two-train central gas processing facility. The water treatment plant, waste management area and electricity substation have also been completed along with accommodation units for the construction workforce of up to 12,000.

Yousuf Al Ojaili, BP Oman President, commented: “This is a world class project and with key infrastructure and many buildings now in place it is possible to see the real shape and scale of the facility emerging. Our aim is for first gas to be flowing by the end of 2017, representing a significant moment for Oman, with the gas that comes from Khazzan substantially increasing our country’s overall supply and supporting greater diversification of Oman’s industrial base. Reliable gas supplies are needed for the country’s power sector and energy intensive industries. Also, this unique project is an excellent opportunity to develop Omani expertise in tight gas development and BP is proud to lead this effort.”

The Khazzan drilling programme is also on track with 38 of the 50 wells needed by first gas already drilled. More than 300 wells will eventually be drilled over the lifetime of the project. BP has plans in place with extensions to be contributing 1.5 billion cubic feet of gas per day to the Omani economy.

As the largest investor among the integrated oil companies in the Middle East and North Africa, BP brings a wealth of technical expertise in advanced seismic, hydraulic fracturing and horizontal well design. This deep technical knowledge is key to unlocking the vast reserves of tight gas which are contained in the deep, dense and extremely hard rock strata at Khazzan.

BP Oman is lead partner in the project with a 60% interest. Oman Oil Company Exploration & Production holds 40%.

With national oil companies BP is currently managing over 3 million barrels per day of oil and gas production throughout the Middle East.

Notes to editors

  • BP is one of the largest oil and gas companies in the world and has had an upstream presence in Oman since 2007.
  • In December 2013, the Government of the Sultanate of Oman and BP signed a gas sales agreement and an amended production sharing agreement for the development of the Khazzan Project in Block 61. The agreements were ratified in February 2014 in a Royal Decree issued by His Majesty Sultan Qaboos Bin Said.
  • BP is the Operator of Block 61 and holds a 60% interest. The Oman Oil Company for Exploration and Production holds a 40% interest.
  • In February of 2016, BP signed a heads of agreement with the Government of the Sultanate of Oman committing to amend the Oman Block 61 exploration and production sharing agreement (EPSA). Development of this additional resource is subject to final approval of the Omani Government and of BP; both expected in 2017.
  • Phase 1 is on track to deliver first gas by end 2017 producing 1.0 billion cubic feet of gas a day (bcf/d).
  • Combined plateau production from Phases 1 and 2 is expected to be 1.5 billion cubic feet of gas a day (bcf/d), equivalent to a third of Oman’s current total domestic gas production.

Further information

Thuraya Al Taei
Communication Manager - BP Oman
Phone: +968 24684151
Email: thuraya.Altaei@uk.bp.com

Ali Al Yaaquubi 
Communication Specialist - BP Oman
Phone: +968 9450 1977             
Email: ali.alyaaquubi@uk.bp.com

Cautionary statement

In order to utilize the ‘safe harbor’ provisions of the United States Private Securities Litigation Reform Act of 1995 (the ‘PSLRA’), BP is providing the following cautionary statement. This press release contains certain forward-looking statements concerning BP’s Khazzan gas project in Oman, including expectations regarding the delivery of first gas and the timing thereof; plans and expectations regarding future production levels and the contribution thereof to Oman’s natural gas supply and economy; and plans and expectations regarding the drilling of additional wells. Actual results may differ from those expressed in such statements, depending on a variety of factors including changes in public expectations and other changes to business conditions; the timing, quantum and nature of divestments; the receipt of relevant third-party and/or regulatory approvals; future levels of industry product supply; demand and pricing; OPEC quota restrictions; PSA effects; operational problems; regulatory or legal actions; economic and financial conditions generally or in various countries and regions; political stability and economic growth in relevant areas of the world; changes in laws and governmental regulations; exchange rate fluctuations; development and use of new technology; the success or otherwise of partnering; the actions of competitors, trading partners and others; natural disasters and adverse weather conditions; changes in public expectations and other changes to business conditions; wars and acts of terrorism, cyber-attacks or sabotage; and other factors discussed under “Principal risks and uncertainties” in our Stock Exchange Announcement for the period ended 30 June 2016 and under "Risk factors" in our Annual Report and Form 20-F 2015.

This press release contains references to non-proved resources and production outlooks based on non-proved resources that the SEC's rules prohibit us from including in our filings with the SEC. U.S. investors are urged to consider closely the disclosures in our Form 20-F, SEC File No. 1-06262. This form is available on our website at www.bp.com. You can also obtain this form from the SEC by calling 1-800-SEC-0330 or by logging on to their website at www.sec.gov.