By ROBERT TUTTLE
LONDON (Bloomberg) -- BP signed an
agreement with Oman to develop the $16 billion Khazzan
Construction will begin next year
with first gas expected by 2017, the company said in a
statement. The 30-year project will deliver about 1 Bcfd of
gas at peak and 25,000 bpd of gas condensate.
It is one of the largest projects we will be investing in in
the next four years, during the major investment phase,
CEO Bob Dudley told reporters in Muscat. He declined to
disclose the agreed price for gas. The price is less
relevant than ensuring a reasonable rate of return.
Dudley is trying to return BP to growth after divesting more
than $60 billion in assets in the wake of the 2010 Deepwater
Horizon blast, which killed 11 people and set off the largest
offshore oil spill in United States history. BP shares have
languished about 30 % below the pre-spill level as the company
faces billions of dollars in fines and settlement payouts.
BP will own 60 % of the venture and Oman Oil will hold 40 %,
Oman Oil Minister Mohammed al-Rumhy said.
The Khazzan project involves unlocking gas from rocks
underground. Eleven initial wells have already been drilled, BP
said. Khazzan will account for one-third of the countrys
gas output, according to the statement.
Oman and Persian Gulf neighbors face rising gas demand for
power and industry amid limited supplies. Some are turning to
more technically challenging and expensive projects to produce the fuel. Saudi
Arabia seeks to extract gas from shale.
Oman, which has reduced liquefied natural
gas exports to meet rising domestic demand, reached a
preliminary agreement to import natural
gas from Iran in August.