PTT Exploration and Production Public Company Limited (PTTEP) has announced that on 1 February 2021, PTTEP MENA Limited (a subsidiary of PTTEP) has signed a Sale and Purchase Agreement (SPA) to acquire 20% of BP Exploration (Epsilon) Limited (BP)’s interest in Block 61 Sultanate of Oman (Oman Block 61), which BP currently holds 60% interest (40% after acquisition) and is the operator. Other partners are Makarim Gas Development LLC (OQ) and PC Oman Ventures Limited (PETRONAS) which holds 30% and 10% participating interests, respectively.
The Oman Block 61 is a producing onshore gas block situated in central of Sultanate of Oman with total area of 3,950 square kilometers. Gas from Block 61 has the capacity to deliver approximately 35% of total gas output in Oman. Gas from Block 61 is exported for domestic consumption into Oman’s national gas grid, while also boosting availability of feedstock supply for Oman LNG.
The project comprises two phases, Khazzan, which began production in 2017, followed by Ghazeer in October 2020. The project is expected to develop 10.5 trillion cubic feet of gas resources, with a combined daily production capacity of 1.5 billion cubic feet of gas and more than 65,000 barrels of condensate (100% project). The joint venture also has plans in place to increase the capacity in the future.
The transaction value of this acquisition is 2,450 million US dollars, subject to final net working capital and other closing adjustments per SPA, and the contingent payment at maximum amount of 140 million US dollars, if the pre-agreed conditions under SPA are accomplished. PTTEP plans to use its available cash on hand to fund the acquisition upon the completion date. The transaction completion is subject to customary conditions precedent including, among other things, necessary regulatory approvals as prescribed in the SPA, with an expected closing date in 2021.
The acquisition of 20% participating interest in Block 61, Oman strategically fits with PTTEP’s strategy, focusing on prolific areas in the Middle East, especially in the project with large reserves, competitive unit cost, and to partner with leading oil and gas companies. Furthermore, this investment will fit well with the company’s strategy to increase gas portfolio, in order to minimize the impact from oil price fluctuation, and to venture into LNG value chain strategy.