US FIRM Occidental (Oxy) has beaten rivals ExxonMobil and Denmark’s Maersk to a contract to boost oil production from Bahrain’s tiny Awali field, according to a top Bahraini government official.
The Mideast Gulf producer is now preparing to negotiate contract terms, with a final agreement expected to be inked in the first quarter of 2009.
“Working together, Oxy and Bapco believe that both oil and gas production from the field can be greatly enhanced over the life of the contract,” says an Oxy spokesman.
Oxy, an international oil and gas exploration and production company as well as a major North American chemical manufacturer, is the fourth-largest US oil and gas company, based on market capitalisation, with more than 10,000 employees on four continents. Oxy has been a partner in the Middle East and North Africa for four decades, working with the governments of Bahrain, Libya, Oman, Qatar, the UAE and Yemen. About one-fourth of Oxy’s worldwide oil and gas production comes from the Middle East and North Africa region, where the company has been an active investor and continues to develop opportunities.
In the Middle East, Oxy is the second-largest oil producer in both Oman and Qatar and a leading holder of exploration acreage in Libya. Oxy also is a partner in the giant Dolphin Project, one of the region’s largest energy initiatives. Dolphin supplies natural gas – produced from wells offshore Qatar, processed at Ras Laffan and transported through a 230-mile-long subsea export pipeline – to markets in the UAE and Oman.
Oxy is also working with Bapco and Noga to further explore offshore Blocks 1, 3 and 4.
“Based on our operating experience in the region, Oxy has built a strong understanding of prospective trends for exploration. This, combined with information provided by the government of Bahrain, could lead to the discovery of new oil and gas fields in the kingdom,” the spokesman says.
Three international oil companies were short-listed earlier this year for the contract to develop the field, which now produces 33,000 barrels per day (bpd) of oil, 10,000 bpd of LPG and 150,000 barrels of oil equivalent per day of natural gas.
“We ranked the three companies according to their bids and Oxy came at the top,” Oil Minister Dr Abdul-Hussain bin Ali Mirza says. “We’ll start negotiations with them soon.”
Once the oil ministry gives the official go-ahead following approval from the government tender board, Bahrain Petroleum Co (Bapco) will start negotiations with Oxy. Talks will focus mainly on commercial details of the contract, which will deal with incremental oil production over the next 20 years. Bahrain will own the “base production” – the volumes envisaged in Bapco’s current development plans – which are based mainly on traditional extraction methods. According to another government official, base production is set at 38,000-40,000 bpd over the contract term.
Bahrain’s National Oil and Gas Authority (Noga) will buy any oil produced above base production levels.
Oxy is expected to bring much-needed new technology and expertise to help swell output at the mature field, which was discovered in 1932. It would introduce water flooding, horizontal drilling and gas injection, in addition to enhanced oil recovery (EOR). Bapco will establish a joint operating company with Oxy and expects to receive technology, staff training and information about EOR, the official says.
