Oman’s Ministry of Oil & Gas has received more than five bids from IOCs that want to take over Block 30, which was relinquished by Norway’s DNO in 2015, a senior figure from the ministry told Interfax Natural Gas Daily.
Bidding in the block’s tender was buoyed by new interest from Asian companies, he added.
IOCs were asked to submit bids between 23 October and 15 November. The ministry had intended to select a winning bidder on Thursday, but now plans to inform the successful IOC next week. The ministry will then seek approval for the decision before an official announcement is made in January.
Conventional gas discoveries have been made in Block 30, also known as Hafar, although the nitrogen content of the gas is high, Suleiman al-Ghunaimi, director of petroleum concessions at Oman’s Ministry of Oil and Gas, told Interfax Natural Gas Daily.
DNO announced it was relinquishing the block in its second quarter earnings report in 2015, as part of cost-cutting measures by the company aimed at dealing with the effects of low oil prices. As the previous licence-holders have invested in the block, which is one of Oman’s smaller concessions, the new licensee will be able to focus its investment on development rather than exploration, said Ghunaimi.
Development may be tricky as the 118,500-hectare block straddles the Hajar mountains. While there have been conventional gas finds, tight gas is the predominant play in Block 30, according to a report issued by the ministry.
“To date gas has been discovered in the Natih and Shuaiba formations,” said the report. “These discoveries have not been fully appraised and adjacent structures remain undrilled. There are currently two additional gas prospects mapped within the block.”
Within the tight gas play is an unconventional sub-play, which “has been recognised as a prime target” for unconventional gas, said the ministry. Six of the nine wells drilled within the block have discovered gas in one or both of the Natih and Shuaiba formations.
Block 30 is one of four blocks currently being offered by the ministry. The others are blocks 31, 49 and 52. Bids for Block 31, which was also relinquished by DNO in 2015, are to be submitted by 29 December, and the ministry intends to inform the winning bidder by 31 January 2017.
Block 31, also known as the Sunainah North Block, is an onshore concession covering an area of 852,600 hectares. Like Block 30, tight gas is the predominant play in Block 31, according to the ministry. Gas shows were encountered in Suneinah 2 within the Mayhah formation and four prospects have been mapped within the block so far.
The first well on Block 31 was drilled in 1965, with the last, Wadi Jiffra A1, drilled in late 2011. 2D seismic data available covering 3,700 km, along with two small 3D survey areas. DNO is now participating in just two blocks in Oman: Block 8, off the coast of Musandam governorate, and Block 36, which produced some disappointing results in May.
Block 49, which was returned to the ministry by Irish explorer Circle Oil in 2015, will follow the same schedule as Block 31. It covers 1.5mn hectares and borders Saudi Arabia. Oman’s first exploration well was drilled in Block 49 in 1953. The block has promising oil potential, according to the ministry.
Oil is also the expected target of the massive Block 52. The block covers an offshore area of 9mn hectares and was also relinquished by Circle Oil in 2015. There are three wells in Block 52, and 2D seismic data is available from 14 surveys. Bids are to be submitted by 15 February 2017, with the winner to be selected by 15 March 2017.
Oman has picked a difficult time to reallocate the blocks, but Ghunaimi is positive. “We take into account all of the factors, including the oil price,” he said. “For exploration blocks, [it] is after five – or maybe six – years [before] you can make your first export sale so I think this hasn’t affected us very much in terms of low oil prices because we see interest from the number of companies that participated.”
A number of Asian companies participated in the bid process, many for the first time. While Asian companies have typically had long-standing relationships with Omani companies in the oil and gas sector, they have not previously submitted bids, said Ghunaimi. “We were surprised to see so much interest from these companies,” he said.
