Name: Oman's billion barrel opportunity: Habhab ultra-heavy oil
Brand: Wood Mackenzie
SKU: 66739
Price: 1350 USD
Availability: OnlineOnly
Author: Wood Mackenzie

Insight 16 May 2017

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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.

Executive summary
- 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 the following images and tables:

Map showing location of Habhab in OmanHabhab costs and production assumptionsComparison of Omani fiscal regimes

Cumulative production-based contractor profit share: illustrationInvestor IRR at different prices and cost recovery ceilingsInvestor IRR at different prices and profit share tiersThe value splitOman's billion barrel opportunity: Habhab ultra-heavy oil: Image 6Oman's billion barrel opportunity: Habhab ultra-heavy oil: Table 3