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Oman's billion barrel opportunity: Habhab ultra-heavy oil

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16 May 2017

Oman's billion barrel opportunity: Habhab ultra-heavy oil

Report summary

Petroleum Development Oman (PDO), Oman's largest operator, has launched a tender for a portion of the Habhab ultra-heavy oil field. The opportunity involves the development of one billion barrels of oil initially in place, under a service contract in partnership with PDO. The project is technically challenging due to the heavy, viscous oil and tight sandstone reservoir. Despite this, it represents the largest discovered resource opportunity (DRO) to be offered from PDO's Block 6 since 2005, which will tempt some investors to investigate the opportunity. We have modelled an indicative development scenario for Habhab and believe it is a technically and commercially viable development on a pre-tax basis. However, the project is not commercial under PDO's current concession. Price will be critical to maximising investor returns but our modelling demonstrates that securing generous terms by Oman standards, will be essential to successful project execution.

Table of contents

    • A much anticipated offering from Block 6
    • Habhab is an ultra-heavy oil field...
    • ...to be developed as an in-situ oil sands project
    • Appropriate fiscal terms needed to encourage investment
      • Risk contract structure
      • Fiscal terms important, but price most important
    • Habhab development risks and sensitivities
      • Project sensitivity to cost, production and price
    • Which companies have the expertise and deep enough pockets?
    • Is Habhab worth the risk?
      • Modelling assumptions
        • Fiscal terms
        • Liquids pricing
        • Production
        • Capital expenditure
        • Development wells
        • Operating costs

Tables and charts

This report includes 9 images and tables including:

  • Map showing location of Habhab in Oman
  • Habhab costs and production assumptions
  • Comparison of Omani fiscal regimes
  • Cumulative production-based contractor profit share: illustration
  • Investor IRR at different prices and cost recovery ceilings
  • Investor IRR at different prices and profit share tiers
  • The value split
  • Oman's billion barrel opportunity: Habhab ultra-heavy oil: Image 6
  • Oman's billion barrel opportunity: Habhab ultra-heavy oil: Table 3

What's included

This report contains:

  • Document

    Oman's billion barrel opportunity: Habhab ultra-heavy oil

    PDF 4.43 MB

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