Under the 20-year deal, the companies will develop four existing gas fields and explore a newly formed contract area called Habiba Block 62, in northern Oman.

Occidental will act as operator and hold a 48 per cent share, with Mubadala holding a 32 per cent interest and Oman Oil Company holding the remaining 20 per cent.

Production from the area will start in 2010 and reach a plateau of 165 million cubic feet a day (cf/d) or 27,500 barrels of oil equivalent by the end of 2011.

Total capital investment in the contract area is expected to be about $500m over the next four years.

Occidental’s net share of production will be about 10,000 barrels equivalent a day, with Mubadala’s net share about 6,000 barrels equivalent a day.

The investment will also include up to nine exploration wells over a six-year exploration period to test various gas formations in the region.

Mubadala has previously worked with Occidental in Oman as part of the joint venture developing the Mukhaizna field (MEED 24:6:05).

In October, Occidental agreed a deal with Abu Dhabi National Oil Company (Adnoc) to invest $500m over the next four years to develop the Jarn Yaphour and Ramhan oil and gas fields in Abu Dhabi (MEED 8:10:08).