Oman signs oil exploration agreement with Sweden's Tethys Oil for Block 58

Oman’s oil and gas ministry signed an agreement with Swedish energy firm Tethys Oil to develop a concession in the southwestern part of the country.

Tethys Oil will explore for oil and gas in the Block 58 concession, which straddles the South Oman Salt basin and the Rub Al Khali desert, according to the agreement.

The company, which focuses primarily on Oman’s oil and gas fields, has interests onshore Lithuania and France as well.

“We are very happy to have been given the opportunity to explore for hydrocarbons on Block 58. The signing of this EPSA represents another step in Tethys Oil’s strategy in sultanate of Oman,” said Tethys managing director Magnus Nordin.

Oman, the largest Gulf oil producer outside of Opec, has largely mature hydrocarbon reserves. The 2014-16 oil price crash forced the exit of many international oil and gas firms from the sultanate. The ministry has since launched several bid rounds to auction oil and gas concessions across the country.

As per the agreement, Tethys Oil acquired 7,600 km of 2D seismic and 1,100 square kilometres of 3D seismic data from the block’s previous operators. The company also has access to the raw logs and well reports drilled within the boundaries of the concession earlier.

"Both wells encountered hydrocarbon shows. Multiple play concepts are believed to exist within the block boundaries, including plays familiar to Tethys, with several leads identified,” the company said on Sunday.

The exploration and production sharing agreement (EPSA) will cover an initial exploration period of three years, with the option of extending it for another three.

If Tethys discovers a commercially viable oil and gas resource, the EPSA contract will be transformed into a 15-year production licence, with a provision to extend for another five years.

The government has rights to acquire up to 30 per cent interest in the concession, "against refunding of past expenditure”, the company said.

The first phase of exploration includes a 3D seismic campaign and drilling of two exploration wells.