Petronas takes 10% stake in Oman’s Khazzan development

Max Petrov, from Wood Mackenzie’s corporate analysis team, said: “Petronas is no stranger to Oman, having held exploration acreage adjacent to Khazzan until 2014.

“The announcement highlights Petronas’ strong appetite for international business development and gas resource capture, coming less than six months after  it joined Shell's LNG Canada project.

“We believe the company is buying into the project for its strong gas reserves potential. The size of resource on Block 61 means that future phases could be developed, beyond the current expansion, provided the partners can secure a buyer for the additional gas.”

Mr Petrov added that the development would contribute 2% of Petronas’ global output by 2023.

Liam Yates, from WoodMac’s Middle East upstream team, added: “The deal could be worth in excess of US$1.3 billion to OOCEP, Oman's state-owned oil company. The consideration will be important for the company as spending on Khazzan's second phase, Ghazeer, ramps up.

“OOCEP paid US$136 million for the equivalent 10% stake in 2013 when the first phase of development was sanctioned. The stake is now worth US$1.3 billion (NPV10, October 2018). The value reflects the significant cost savings achieved and reserves expansion following sanction of the second phase of development earlier in 2018.”

He said: “Khazzan recently celebrated one year of gas delivery in Oman, with field output around 1 billion cubic feet per day. When Ghazeer comes onstream in the early-2020s, output will increase to 1.5 billion cubic feet per day – equivalent to around one third of supply.”

Khazzan's output has allowed Oman LNG to export at record levels during 2018.