Oman and Shell sign gas concession deal for Block 10 in Saih Rawl field

Shell, along with its partners OQ and Marsa Liquefied Natural Gas, agreed to develop and produce natural gas

A man walks on the corniche near Mina as Sultan Qaboos Muscat in the Mutrah district in Muscat, the capital of the Sultanate of Oman on Wednesday, Oct. 12, 2011. (Silvia Razgova/The National)

Oman's ministry of energy signed a concession agreement with Shell Integrated Gas Oman BV, a subsidiary of Royal Dutch Shell, along with its partners, OQ and Marsa Liquefied Natural Gas, to develop and produce natural gas from block 10 of the country's Saih Rawl gasfield.

The project is expected to reach production of 0.5 billion cubic feet of gas per day and start up is expected within the next two years, Oman's ministry of energy said on its Twitter account on Tuesday.

The parties also signed a separate gas sales agreement for gas produced from the block, according to the ministry. The two agreements follow an interim upstream agreement signed in February 2019.

"This project will further maximise the potential of Oman’s energy industry, in line with the Sultanate’s strategy to create growth opportunities across all energy streams and in line with Oman’s Vision 2040 priorities," said Mohammed Al Rumhi, Minister of Energy and Minerals in Oman.

Block 10 is located in Saih Rawl in the Al Wusta Governate of Oman, around 400 kilometres from the capital Muscat, and covers an area of about 1,200 square kilometres.

Under the concession agreement, Shell is the operator of block 10, holding a 53.45 per cent working interest, with OQ and Marsa Liquefied Natural Gas holding 13.36 per cent and 33.19 per cent respectively, the company said.

For the initial phase, Petroleum Development Oman is building the infrastructure for the project, including the main pipeline to the Saih Rawl gas processing facility, on behalf of the block 10 venture partners. The venture will drill and hook up wells to maintain the production beyond the initial phase.

Shell and Energy Development Oman also signed an agreement to process the natural gas from block 10 in EDO’s Saih Rawl facility.

Shell and Oman agreed that the company will develop options for a separate downstream gas project in which Shell could produce and sell low-carbon products and support the development of hydrogen in the Sultanate. Any project would be subject to further agreements and future investment decisions.

"We are looking at how Shell can help Oman with developing low-carbon energy in the future,” said Wael Sawan, director of Shell Integrated Gas, Renewables and Energy Solutions.

In a separate statement, TotalEnergies said it signed several deals with Oman's energy ministry for the sustainable development of the country’s natural gas resources.

These include the creation of Marsa LNG, an integrated company between TotalEnergies (80 per cent) and OQ (20 per cent), which signed the concession agreement along with Shell to produce natural gas from block 10.

TotalEnergies’ production from Block 10 is expected to reach about 24,000 boe/d in 2023, it said.

The company also signed a gas sales agreement under which Marsa LNG will sell natural gas from block 10 to the government of Oman for a duration of 18 years or until the start up of the Marsa LNG plant.

“We are pleased to sign these agreements with the sultanate of Oman and further develop our activities in the country while contributing to develop its energy sector in a more sustainable manner,” said Laurent Vivier, senior vice president for Middle East and North Africa of Exploration and Production at TotalEnergies.

Updated: December 21st 2021, 2:44 PM