BP sells 20% stake in Oman concession to Thailand's PTTEP for $2.6bn

BP agreed to sell a 20 per cent stake in an exploration block in Oman to Thailand's largest oil and gas producer for $2.6 billion, as part of the oil major's ongoing divestment programme.

The deal with PTT Exploration and Production Public Company (PTTEP) for Block 61 is expected to complete during 2021, pending regulatory approvals in Oman, the company said on Monday.

BP will remain the majority operator of the block, with 40 per cent interest. Other partners on the block, which includes Oman's massive tight gas development, Khazzan, are state-owned petroleum investment company OQ with a 30 per cent and Malaysia's Petronas with 10 per cent interests.

“We are committed to BP's business in Oman. This agreement allows us to remain at the ‎heart of this world-class development while also making important progress in our global ‎divestment programme," Bernard Looney, BP's chief executive, said.

The deal includes $2.45bn to be paid on completion and subject to final adjustments and $140 million payable on pre-agreed future conditions.

The Khazzan development in Oman, which BP has pioneered, is critical for the non-Opec producer, which has sparse gas resources.

The Khazzan and Ghazeer fields are estimated to hold 10 trillion cubic feet of gas. The partners are looking to develop total output capacity of 1.5 billion cubic feet of gas per day and more than 65,000 barrels per day of condensate. Condensate, which is associated with gas production, fetches a high price in the markets.

Gas produced from the concessions will feed into Oman's national grid for domestic production and will also be used as feedstock for the country's liquefied natural gas facility.

The partial stake sale forms part of BP's ongoing divestment programme, which looks to net $25bn in proceeds by 2025. The oil major wrote off $17.5bn worth of hydrocarbon assets last year, as the Covid-19 pandemic battered the industry.

BP, along with energy giants such as Shell, is committing to reach net zero emissions by 2050, as it looks to integrate more renewables in its business. As part of the divestment process, BP also sold its chemicals business to Ineos, owned by British billionaire Jim Ratcliffe, for $5bn last year.

The deal marks the second concession for PTTEP in Oman, which has recently acquired other operations in the Middle East, including in Abu Dhabi.