Petroleum Development Oman (PDO), the sultanate’s biggest oil and gas producer, has made a major new gas find at the onshore Mabrouk field.

The discovery could be a significant future supply source for Oman’s non-oil industries as much of its gas is exported as liquefied natural gas (LNG) through long-term contracts.

The firm produced a record volume of hydrocarbons in 2012. PDO, which is majority owned by the government of Oman, produced an average 1.24 million barrels of oil equivalent a day (boe/d) in 2012, compared with the previous high of 1.21 million boe/d in 2001, managing director Raoul Restucci said at a press conference in Muscat.

Oil production was buoyed by PDO commissioning enhanced oil recovery (EOR) projects at Qarn Alam using thermal recovery technology, and at Harweel through miscible gas injection.

The company’s crude oil output increased 3 per cent last year to 566,305 barrels a day (b/d), while production of associated and non-associated gas rose 6 per cent to 582,500 boe/d. At the same time, condensate production dropped 1 per cent to 92,500 b/d.

PDO increased aggregate production for the fifth consecutive year after recovering from a trough of less than 1.1 million in the middle of the last decade, Restucci said.

Despite the natural decline of its oil fields, the company has set a target of sustaining crude production above 550,000 b/d for the next decade, using EOR techniques along with exploring and exploiting unconventional reserves.

Restucci also revealed the large Mabrouk Deep gas discovery in the northern part of its concession area, which could contribute significantly to the sultanate’s future gas production.

“The scale of the find at Mabrouk is tremendous news for Oman as it will enable a further significant boost to economic growth and social development,” said the managing director.

Last year’s drilling programme on the Mabrouk field’s Barik and Miqrat reservoirs at a depth of 4,000-5,000 metres estimated in-place volumes of 2.9 trillion cubic feet of gas and 115 million barrels of condensate.

The reservoirs were hydraulically fractured and tested in late 2012, producing an average of 80 million cubic feet a day (cf/d), and connected to the existing Mabrouk facilities in January.

“The Gas Directorate is currently working on a plan to fast track the project for full field development,” PDO said.

There were also five new oil discoveries in 2012, amounting to about 300 million barrels of stock tank oil initially in place from the Shuaiba and Gharif reservoirs.

PDO announced that it replaced 205 million barrels of oil reserves in 2012, compared with 206.8 million barrels of production. The group matured 0.96 trillion cubic feet of natural gas reserves against 0.99 trillion cubic feet of production.

At the same conference, Omani Oil & Gas Minister Mohammed bin Hamad al-Rumhy said the government would prioritise the power, water and hydrocarbons sectors when allotting the new gas supply, with exports only considered if domestic demand is satisfied.

New production from Mabrouk will complement the larger Khazzan tight gas development located about 50 kilometres to the north-east. The government is optimistic it can reach a profit-sharing agreement on the $15bn-plus project with UK energy major BP by the end of the month.

“There are a number of issues that still have to be discussed on both sides,” Al-Rumhy said. “There are disagreements, but we [the government and BP] are both optimistic on reaching an agreement, hopefully in the coming weeks.”

If an agreement is finalised, BP will sign a 30-year deal to produce from the reservoirs.

Al-Rumhy also announced that Oman’s total crude oil production increased by 4 per cent last year to 918,500 b/d and this year expects output to increase to 939,000 b/d.

Oman is aiming to sustain oil production in the medium term driven by investments of more than $1bn each in three onshore megaprojects being developed by PDO – Rabab Harweel Integrated Project, Yibal Khuff and Budour.

“I suspect there may be decline from other companies, [but] decline is natural in our business. When new findings are developed, production can be sustained for much longer,” said Al-Rumhy. “Personally I do not believe production will decline over the next five years.”

Oman’s crude reserves were estimated at 4.6 billion barrels at the end of 2012. By comparison, BP estimated Oman’s proved reserves at 5.5 billion barrels at the end of 2011.