19 July 1996

NEW exploration and production sharing agreements were signed in June with Japan Petroleum Exploration Company (Japex), Partex (Oman) Corporation, and US companies Atlantic Richfield Company (Arco), Triton Energy Corporation and Phillips Petroleum Company. 'The bidding round has seen a strong response, which could well catch the eye of other investors,' says one industry source. Including agreements signed in 1995 with Elf Aquitaine and Total, both of France, recent commitments to investment total $270 million.

The freeing up of the blocks comes as part of government plans for production to reach 1 million b/d within the next 10 years.

In 1995, production averaged nearly 858,000 b/d. The vast majority of the oil- - more than 800,000 b/d- - was produced by Petroleum Development Oman (PDO), which is 60 per cent owned by the state and 34 per cent by Shell Petroleum Company. Other producers are Occidental of Oman, Japex, Elf Petroleum Oman and International Petroleum Bukha.

Target production for 1996 is 901,500 b/d, with the main increase coming from PDO, which is aiming to boost production to 850,000 b/d. Oman's ambition to increase production goes hand in hand with increases in reserves and in 1995 PDO added 367 million barrels, bringing reserves to 5,112 million barrels.

Gas reserves have been revised substantially, with expectation reserves now standing at 30 tcf and proven reserves at 16.2 tcf. PDO currently produces an average of 12.5 million cubic meters a day, earning the government RO 56 million ($145 million) in 1995. Gas earnings are set to rise rapidly in the next century with a variety of projects, spearheaded by the liquefied natural gas (LNG) scheme, now gathering pace.

Technical bids for three upstream packages, being handled by PDO, are due in July.

Oman LNG, handling the downstream element, has secured Korea and Thailand as customers and recently announced that Japan's Chiyoda Corporation, with the UK's Foster Wheeler, is to be awarded the construction contract for the liquefaction plant.

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