Talks ongoing on Greater Barik integrated gas deal

NOVEL APPROACH: Pact will create new paradigm for gas development and monetisation in the Sultanate, committing investors to both upstream and downstream elements

Negotiations centring on the development and monetisation of potentially prolific gas resources discovered in the Greater Barik area onshore Block 6 are ongoing, according to a high-level official of Oman’s Ministry of Oil & Gas.

The outcome of these talks is keenly anticipated because it promises to create a new paradigm for the development and monetisation of the Sultanate’s gas resources. In this model, foreign investors will be invited not only to develop and commercialise gas resources in specific fields or blocks, but also invest in downstream industries that utilise these resources.

This integrated development, encompassing investments in the upstream and downstream ends of the gas business, will serve as a new template for Oman’s gas sector. It will supplement gas exploration and production underpinned by standard Exploration & Production Sharing Agreements (EPSA), according to Salim bin Nasser al Aufi (pictured), Under-secretary of the Ministry of Oil & Gas.

“We are connecting the gas development with industry directly, allowing investors to participate in the complete value chain from the gas well all the way to the export tanker, connecting everything together,” Al Aufi said.

Downstream projects created as a result of this integration will contribute to a “multiplier-effect” in the form of employment generation — direct and indirect — in-country utilisation of gas resources for value creation, and other benefits, he said.

Exemplifying this new paradigm in integrated gas development is the Greater Barik project, which is the subject of discussions between energy majors Shell and Total, as well as Oman Oil Company (OOC), the wholly owned energy investment arm of the Omani government, and the Ministry of Oil & Gas.

In May this year, Shell and Total signed Mous with the Omani government to develop a cluster of gas discoveries located in the Greater Barik area in central Oman. Under a separate agreement reached between the two energy firms, Shell (also as operator with a 75 per cent share) and Total (25 per cent) have targeted an initial production of around 500 million standard cubic feet per day (Mmcfd) with a potential to reach 1 billion cubic feet/day in the future.

Shell has committed to utilsing part of this output in the development of a first-of-its-kind gas-to-liquids (GTL) project in the Sultanate. Total, for its part, aims to use its equity gas entitlement as feedstock to develop a regional hub for Liquefied Natural Gas (LNG) bunkering service which will supply LNG as a fuel to marine vessels. A liquefaction plant initially of around 1 million tonnes-per-year capacity is proposed to be built and operated by Total at Sohar Port. Oman Oil Company is expected to partner with Shell and Total in both the upstream and downstream investments.

“Discussions are ongoing,” said Al Aufi. “Hopefully we will get to a point where we can sign a Heads (Picture for illustration) of Agreement (HOA) with most of the terms agreed in terms of the integration of the project, the government’s share, Omanisation targets, size of foreign investment that will be brought into the country, and so on. A lot of those negotiations are currently ongoing, with Oman Oil Company, of course, going to be part of all of these discussions,” he stated.

Significantly, the Greater Barik area includes the potentially prolific Mabrouk gas discovery, billed as a “significant” gas find.