Swedish energy company Maha Energy has entered into an agreement with Oman’s Mafraq Energy for Maha to reduce its participating interest in the Block 70 Exploration and Production Sharing Agreement (EPSA) in Oman, according to a statement published by the company.
Under the terms of the deal and subject to the Oman government's approval, the stake will be reduced from 100 per cent to 65 per cent.
Maha will continue to be the operator of the block.
In its statement, the company said: “Maha has decided to reduce its working interest in the onshore oil-bearing Block 70 in Oman by bringing in a strategic Omani partner.”
The agreement requires Mafraq Energy to reimburse Maha for its prorated share of all past costs, including the signature bonus.
Mafraq Energy will also be required to pay its share of all future expenditures on Block 70.
Maha CEO Jonas Lindvall said: “We are delighted to have Mafraq Energy join us on Block 70.
“Mafraq Energy brings extensive experience of the Mafraq field and the surrounding areas in Oman.
“The fact that Mafraq Energy joins us is perhaps the best evidence yet of the future potential of the Mafraq field.”
Talal al-Subhi, director of Mafraq Energy, said: “We are pleased and honoured to join Maha Energy to commercialise Oman’s national resources.
“The farm-out arrangement is also completely aligned with the realisation of the Oman national 2040 vision ‘Growing the Private Sector’, and we are proud to be doing our part.”
Immediate plans for the Mafraq oil field include drilling six wells to obtain reservoir information to assist in developing a full field development plan.
The Gulf Drilling rig 109 was recently contracted for this drilling. The anticipated mobilisation of the drilling rig is scheduled for October this year.
Mafraq Energy is a private Omani company with sister companies in the upstream and downstream oil and gas sectors.
Its sister companies are also active in manufacturing and telecommunications.
Maha successfully secured Block 70, which contains the Mafraq heavy oil discovery, in a 2019-20 government bid round.
The Mafraq structure is a delineated heavy oil field extensively tested by Petroleum Development Oman (PDO) in 1988 and 1991.
The field tested 15,700 barrels of 13° API oil over 24 days using a progressive cavity pump (PCP) from a single well.
The test well, MF-5, tested 100 per cent oil for less than a day, after which water production stabilised at around 25 per cent.
It is unknown why PDO did not develop the field at the time, but it is likely that prevailing global oil prices, which were around $19 a barrel, were a factor.
Another factor could have been that access to other lower-cost opportunities precluded Mafraq as a development option at the time.
According to the independent reserve auditor, Canada’s Chapman Petroleum Engineering, the Mafraq field may hold approximately 35 million barrels of recoverable oil.
Following the Oman government's farm-out approval, Maha’s share of its contingent resources will be reduced proportionally by 35 per cent.
According to Maha Energy, the Mafraq structure is an East-West fault bounded anticline with the productive interval at +/- 430 metres below the ground level. "The oil flows freely in the reservoir at 51°C and is expected to cold flow to surface in commercial quantities.”
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