Oman Oil Company to Invite Bids for Musandam Oil Pipeline and Processing Project

---

Researched by Industrial Info Resources (Sugar Land, Texas)--State-owned Oman Oil Company SAOC (Muscat, Oman) has announced that bidding for the engineering, procurement and construction (EPC) contract for the Musandam oil processing and pipeline project will begin shortly. The value of the Musandam project, located in the northern part of the country, is estimated to be in the range of $300 million to $500 million. Sources indicate that at least four international firms have been identified and invited to bid for the project. The pre-qualified companies are Hyundai Heavy Industries Company Limited (SEO:009540) (Ulsan, South Korea), Larsen & Toubro Limited (BSE:500510) (Mumbai), OTF Contracting Company (Budapest, Hungary) and Engineers India Limited (BSE:532178) (New Delhi). The deadline for submission of technical tenders is August 29, 2009, while the request for commercial bids will be made in the next couple of months.

The scope of the contract will include development of the processing facility and linking it to the West Bukha offshore field through a 1-kilometer pipeline network. The West Bukha field, owned by RAK Petroleum (Dubai, United Arab Emirates), is situated off the Strait of Hormuz. The company selected to undertake the contract will also carry out civil work activities, which will include leveling the land after excavation. Construction of a 750-meter jetty is also proposed. Industry experts and some of the bidding firms state that the activity could be expensive because of the rough topography of the region. On commencing operations, the plant will process 45 million standard cubic feet per day of gas and about 20,000 barrels per day (BBL/d) of oil. The Musandam pipeline and processing plant contract is expected to be the single largest contract to be awarded in the oil and gas sector in Oman this year.

Oman Oil Company was established in 1996 to further the country's international and domestic investments in the energy sector. The company's interests span discovery, exploration and production of energy, metals, shipping and infrastructure, power, petrochemicals and refining.

Oman Oil Company, in partnership with Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands), Partex Oil and Gas Holdings Corporation (Lisbon, Portugal), Occidental Petroleum Corporation (NYSE:OXY) (Los Angeles, California), Total SA (NYSE:TOT) (Paris, France) and Liwa Energy Limited (Abu Dhabi, United Arab Emirates), is developing the Mukhaizna oilfield under a 30-year agreement with the Omani government. About 2,000 wells are expected to be drilled, which will take the production capability of this field from the present 20,000 BBL/d to about 150,000 BBL/d by 2012. Oman Oil Company holds a stake of 20% in this venture, while Occidental Petroleum, Shell, Partex, Liwa, and Total own stakes of 45%, 17%, 1%, 15%, and 2%, respectively.

Oman Oil Company, along with Shell and Kazmunayteniz (KMT) (Astana, Kazakhstan), has also received an exploration and production license for the 895-square-kilometer Caspian offshore fields. The project, which is in its initial phase, is expected to ultimately yield 340 million barrels to 1.2 billion barrels of oil. KMT and Shell hold stakes of 25% and 55%, respectively, while the balance of 20% is held by Oman Oil Company.

In association with PT Medco Energi Internasional Tbk (IDX:MEDC) (Jakarta, Indonesia), Oman Oil Company is carrying out an oilfields services contract at Karim Small Fields, located in Shwaimiah in South Oman. The project, which consists of a group of 18 fields, aims to increase production from the present level of 18,000 BBL/d to 30,000 BBL/d. The oilfields are located in the Block 6 concession area and are owned by Petroleum Development Oman (Muscat, Oman).

According to the Statistical Review of World Energy 2009, published by BP plc (NYSE:BP) (London, United Kingdom), at the end of 2008, Oman had about 5.6 billion barrels of oil reserves and gas assets of around 980 billion cubic meters. During the same period, the country produced 728,000 BBL/d of oil and 24.1 billion cubic meters of natural gas. For the first time since 2001, Oman is expected to increase its oil output this year. This has been attributed to the extensive use of enhanced recovery methods, which have allowed oil extraction located in difficult and rough terrain. The oil and gas ministry is hopeful that the production level of oil will exceed 800,000 BBL/d by the end of this fiscal year.

In April, three contracts in the oil and gas sector were awarded to international firms. BG Group plc (OTC:BRGYY) (Reading, United Kingdom), Petroliam Nasional Berhad (Petronas) (Kuala Lumpur, Malaysia) and Harvest Natural Resources Incorporated (NYSE:HNR) (Houston, Texas) have received licenses, which will permit them to carry out discovery and exploration activities during the next three to four years in the areas identified in the Block 6 concession region.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project opportunity databases, market forecasts, high resolution maps, and daily industry news.