ExxonMobil and Shell are knocking on Algeria's door, but BP is poised to take the first plunge into the Middle East and North Africa region¿s hard-to-access gas reserves.
BP poised for Omani production
Even as ExxonMobil and Shell are knocking on Algeria's door, another oil major is poised to take the first plunge into the Middle East and North Africa region's hard-to-access gas reserves.
BP is in advanced talks with Oman to produce the country's substantial tight gas reservoirs, stuck in rock formations as deep as five kilometres underground.
The British energy giant has already spent US$700 million (Dh2.57 billion) to appraise the Khazzan and Makarem gasfields, and has concluded that production is feasible. It expects to make a final investment decision by February.
At a cost of up to $20bn, BP would be able to produce at least 1.2 billion cubic feet a day over a 10-year period, a significant boost to Oman's gas supplies. Production could start as early as 2016. This contrasts with Algeria, where Exxon, Shell and Italy's Eni can hope for production of shale gas by about 2025, according to analysts. Like tight gas, shale gas is trapped in rock formations deep under the Earth's surface, and releasing the hydrocarbon necessitates complex drilling procedures and the fracturing of the rock.
Like most of its GCC neighbours, Oman urgently needs to expand its gas supply to cater for the rising electricity requirements of its population and industry.
Last year, the oil and gas ministry said the government had frozen new industrial projects until the energy supply had been guaranteed.
There is political urgency to get these projects off the ground.
The Arab Spring has made it clear that unemployment poses a threat to governments, and creating jobs has moved to the top of the agenda in Oman and throughout the Arabian Gulf.
"The big agenda right now is around job creation," said Jonathan Evans, the BP general manager for exploration in Oman, when announcing the commercial viability of the gasfields last year.
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