Tuesday 08 November 2016 4:02 pm

BP and Oman Oil Company get sign-off to extend licensing area in giant Khazzan tight gas field

BP and Oman Oil Company have signed an agreement with the government of Oman to extend their licensing agreement in Oman's huge Khazzan gas field, paving the way for a second phase of development at the site.

The amended exploration and production sharing agreement adds more than 1,000 sq km to the south and west of the original 2,700 sq km of BP and Oman Oil Company's licensing area, Block 61.

Output from the field will primarily go to Oman's domestic market and is expected to make up 40 per cent of the country's total gas production.

BP is the operator of the block with a 60 per cent interest while Oman Oil holds the remaining 40 per cent.

Phase one of the project is due to come online next year and will generate around 1bn cubic feet of gas per day, of which BP will receive 600m cubic feet.

When the second phase comes on stream, estimated to be in 2020, the combined production will reach 1.5bn cubic feet of gas per day from a total of 10.5 trillion cubic feet of recoverable resources.

BP's total daily gas production is currently 5.8bn cubic feet per day. Development of the second phase is subject to final approval from the government of Oman and BP, both of which are expected next year.

Khazzan is a tight gas field, meaning its gas is locked in hard rock and more intense efforts to extract it from underground.

Bob Dudley, BP chief executive, said:

I am very pleased to be in Muscat to sign this important agreement with our partners. BP is proud to expand our cooperation in the Khazzan project which will be the major source of energy for the Omani economy for decades to come.

This expansion will build on our work on the first phase, working closely with our Omani partners and demonstrates our commitment to invest in a significant project that will deliver long-term value to both Oman and BP.

Biojet venture

BP today also announced a $30m (£24m) strategic partnership between BP Ventures and Air BP with a company that specialises in the development and production of low-carbon jet fuel.

The British oil giant has secured a 10-year offtake agreement with Fulcrum BioEnergy for 50m US gallons per year from their biojet fuel plants under development across North America.

Air BP will also distribute and supply biojet into aircraft at "key hubs" across the continent.

Tufan Erginbilgic, chief executive of BP's downstream segment, said: "BP is committed to supporting a transition to a lower carbon economy. With support from two of Air BP's strategic customers, Cathay Pacific Airways and United Airlines, Fulcrum is well advanced in its goal to produce and supply scalable biojet, and BP is excited by the opportunities that this partnership offers."