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OMAN - Oxy Group - Mukhaizna.

When Mukhaizna was part of the PDO's concession, the complex field in the south was put on stream in mid-2000 with a capacity of 16,000 b/d of very heavy oil but the output has since fallen to 10,000 b/d. Shell spent years preparing its further development and an extensive EOR system. As the MOG reviewed the relevant plans in early 2005 and received preliminary offers from other firms, Shell proposed to raise the field's capacity to 80,000 b/d by 2010. But Occidental Petroleum of the US (Oxy) offered a 150,000 b/d capacity by 2011 at about the same cost. In June the MOC awarded the field to a consortium led by Oxy, as operator with a 45% stake. The other partners in this are the Omani government through Oman Oil Co. (OOD) with 20%, Shell with 17%, Liwa Energy Ltd. (a unit of Mubadala - an investment firm of the government of Abu Dhabi) with 15%, Total E&P Oman with 2% and Partex (Oman) with 1%.

This field has a steam injection system similar to the one for Qarn Alam. But the field will have a far more extensive EOR system to be installed by Oxy. Mukhaizna has between 2 bn and 2.4 bn barrels of oil in place. Oxy will try to maximise the recovery rate through to 2011 under a programme in which total investments may exceed $2,000m. The Oxy-led group on Jan. 4 issued a preliminary information notice inviting prequalifiers to bid for the main EPC contract. The invitees have included: Petrofac/Galfar, Dodsal of India, Tecnicas Reunidas of Spain; and Technip of France. A tender was issued on Jan. 11. Bids are to be submitted on March 25.

To be worth $250-350m, the EPC contract covers central production processing units, satellite production processing facilities, an oil tank farm and associated works. The Mukhaizna project calls for use of thermal injection techniques. WorleyParsons MEG of Canada has done the FEED work.

The whole project's scope calls for the drilling of more than 1,800 wells and construction of 80 steam plants. Mukhaizna's crude is so heavy that Oxy will have to mix it with lighter crudes in order for it to flow through pipelines.

In July 2005 when the PSA was approved by a decree issued by Sultan Qaboos, Oxy's CEO Dr. Ray R. Irani was quoted as saying: "We are very pleased to have been chosen to work as partners with Oman to develop this important project. This is another step in the implementation of our growth strategy in one of our core areas. Occidental is an industry leader in increasing and prolonging production from mature and under-developed fields by applying cutting-edge technology and state-of-the-art reservoir management techniques. This is an exciting opportunity to create value for the people of Oman and for our stockholders". (Mukhaizna was discovered in 1975 by PDO. Oxy has been active in Oman since 1979.

A Shell spokesman then said: "Shell has lots of experience in the kind of work required at Mukhaizna and we are still very keen to support the government in developing the field. Everyone portrayed the change of ownership as a bloody nose for Shell, but this is a very large project, which has grown in size, and another way of looking at it would be to see it as a means of sharing the risk".

Liwa's parent, Mubadala Development, is investing heavily in Oman including a stake in a 1m t/y methanol venture in the south. Dolphin Energy Ltd (DEL) has been buying Omani gas and will supply the sultanate with Qatari gas from early 2007. The Abu Dhabi Water and Electricity Authority (ADWEA) is investing in Oman's aluminium smelter.
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Publication:APS Review Gas Market Trends
Date:Feb 6, 2006
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