Oman Oil Co. is planning to sell a 10 percent stake in a key natural gas field in the sultanate amid a review of the state-owned energy producer’s options for restructuring its business, according to people with knowledge of the matter.
The holding in the Khazzan gas field, which is 60 percent owned by energy giant BP Plc, could be worth about $1 billion or more, the people said, asking not to be identified as the information is private. The asset is drawing interest from Chinese, Middle Eastern and Indian companies, and Oman Oil, which owns 40 percent of the field, expects to get bids by July, the people said.
No final decisions have been made and the oil giant may still decide to retain the stake, the people said. Representatives for Oman Oil couldn’t immediately be reached for comment.
The energy producer is working with investment bank Lazard Ltd. on ways to revitalize its operations as Oman, like its Gulf neighbors, seeks to reduce its dependence on oil following a crash in prices, people familiar with the matter said this month. Oman Oil is weighing measures ranging from a potential initial public offering for its exploration business to fully integrating its refining unit into the parent company, as well as asset disposals, the people said at the time.
BP and Oman Oil signed off on the second phase of the onshore Khazzan project, called Ghazeer, in April. The field is expected to start production in 2021, and the new investment is likely to boost overall output by 50 percent to 1.5 billion cubic feet (255,000 barrels of oil equivalent) a day, BP has said.
Khazzan is unique because it’s one of the few fields outside the U.S. that uses technology which kicked off the shale boom. While the rocks BP is drilling into aren’t shale, it has applied hydraulic fracturing to boost output at the site.