BP (LSE: BP) (NYSE: BP.US) this morning announced that it has signed both a gas sales agreement and an amended production-sharing agreement with the Government of the Sultanate of Oman for the development of the Khazzan field, for an initial period of 30 years.
The full field development will involve around 300 wells being drilled over a 15 year period, which should deliver plateau production of one billion cubic feet (28.3 million cubic metres) of gas and 25,000 barrels of gas condensate per day, equivalent to around a third of Oman's total daily domestic gas supply. Overall, investment in the Khazzan field will total around $16bn.
Construction work for the Khazzan project will begin next year, and the first gas flow is expected in late 2017. Gas production is expected to ramp up to plateau in 2018
Commenting on the announcement group chief executive Bob Dudley said:
"We are very pleased to be going ahead with this major project, which is very important for both Oman and for BP. This enables BP to bring to Oman the experience it has built up in tight gas production over many decades. This is one more example of BP developing a long term gas supply chain, in this case to bring energy to customers in Oman for decades to come."
At just shy of 468p, BP's share price is up 10% so far this year, and has gained almost 60% since its p ost-Deepwater Horizon disaster nadir in late June 2010, but is still down almost 9.4% over the past five years. BP's shares currently stand on a forward yield of almost 5.4%.
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