Swedish firm to divest from Oman’s Block 70
Published: 05:12 PM,Dec 01,2023 | EDITED : 09:12 PM,Dec 01,2023
Block 70’s crude is characterised as heavy oil but leans closer to Extra Heavy Oil Bitumen
MUSCAT - Swedish upstream energy firm Mafraq Energy has announced the divestment of its 65 per cent working interest in Block 70 in central Oman, as it hands over the reins of an ongoing quest to unlock the block’s heavy oil resources to Omani partner Mafraq Energy.
Mafraq Energy, which has a well-established presence in Oman through affiliations with sister companies in the upstream sector, currently holds a 35 per cent working interest in the concession. It will now be responsible for all aspects of the project from Friday, said Maha Energy in a statement.
The handover, and ultimately Maha Energy’s exit from Oman’s upstream energy sector, is subject to the signing of a definitive sale and purchase agreement, and a final greenlight from Omani authorities, it further noted.
An extended Exploration & Production Sharing Agreement (EPSA) signed with the Ministry of Energy and Minerals for Block 70 is set to expire on December 31. Originally due to expire at the end of October, the extension was designed to enable Maha Energy to carry out “activities and tests necessary to support any decision” with regard to the development of the Block’s Mafraq oilfield – a promising heavy oil reservoir.
The relatively tiny block, covering an area of 639 sq kilometres, is located in the middle of the prolific oil producing Ghaba Salt Basin in central Oman. Its shallow undeveloped Mafraq heavy oil field was discovered by Petroleum Development Oman (PDO) in 1988. With a viscosity ranging from 11 – 13 API, Mafraq’s crude is characterised as heavy oil but leans closer to Extra Heavy Oil Bitumen, which has a viscosity ranging from 0 to 10 API.
During a short-term production test launched by the operator earlier this year, five out of eight new drilled production wells produced oil to the surface at an initial estimated average rate of 300 barrels of oil per day. However, the produced oil was heavy with an API of 11-13 degrees and with higher viscosity than pre-testing estimates, the company said. Due to the high viscosity, the oil did not meet processing specifications for third party’s facilities, it further stated.
Kjetil Solbraekke, CEO of Maha Energy, commented: “Block 70 has a high viscosity oil. I believe the project has to consider a heat influx strategy to deal with this. It will require new tests, significant investments and a very dedicated operator, which I believe we will have with Mafraq Energy who has worked on this asset since the very beginning. We wish Mafraq Energy all the luck with their future work on Block 70. Maha will now be able to focus on developing the business in Latin America, where we are especially enthusiastic about our position in Venezuela.”
Talal S al Subhi, CEO of Mafraq Energy, stated: “Mafraq Energy and Oman value the wealth of experience and work that was injected in Block 70, and we look forward to continuing the project and creation of value for Oman. Mafraq will always value the relations with Maha Energy.”
Mafraq Energy, which has a well-established presence in Oman through affiliations with sister companies in the upstream sector, currently holds a 35 per cent working interest in the concession. It will now be responsible for all aspects of the project from Friday, said Maha Energy in a statement.
The handover, and ultimately Maha Energy’s exit from Oman’s upstream energy sector, is subject to the signing of a definitive sale and purchase agreement, and a final greenlight from Omani authorities, it further noted.
An extended Exploration & Production Sharing Agreement (EPSA) signed with the Ministry of Energy and Minerals for Block 70 is set to expire on December 31. Originally due to expire at the end of October, the extension was designed to enable Maha Energy to carry out “activities and tests necessary to support any decision” with regard to the development of the Block’s Mafraq oilfield – a promising heavy oil reservoir.
The relatively tiny block, covering an area of 639 sq kilometres, is located in the middle of the prolific oil producing Ghaba Salt Basin in central Oman. Its shallow undeveloped Mafraq heavy oil field was discovered by Petroleum Development Oman (PDO) in 1988. With a viscosity ranging from 11 – 13 API, Mafraq’s crude is characterised as heavy oil but leans closer to Extra Heavy Oil Bitumen, which has a viscosity ranging from 0 to 10 API.
During a short-term production test launched by the operator earlier this year, five out of eight new drilled production wells produced oil to the surface at an initial estimated average rate of 300 barrels of oil per day. However, the produced oil was heavy with an API of 11-13 degrees and with higher viscosity than pre-testing estimates, the company said. Due to the high viscosity, the oil did not meet processing specifications for third party’s facilities, it further stated.
Kjetil Solbraekke, CEO of Maha Energy, commented: “Block 70 has a high viscosity oil. I believe the project has to consider a heat influx strategy to deal with this. It will require new tests, significant investments and a very dedicated operator, which I believe we will have with Mafraq Energy who has worked on this asset since the very beginning. We wish Mafraq Energy all the luck with their future work on Block 70. Maha will now be able to focus on developing the business in Latin America, where we are especially enthusiastic about our position in Venezuela.”
Talal S al Subhi, CEO of Mafraq Energy, stated: “Mafraq Energy and Oman value the wealth of experience and work that was injected in Block 70, and we look forward to continuing the project and creation of value for Oman. Mafraq will always value the relations with Maha Energy.”