Major oil company to continue funding growth in Oman
Occidental Petroleum Corporation expects its capital program to increase by $10.2 billion (Fabio Bucciarelli/AFP)
Occidental Petroleum Corporation (Oxy) plans to boost its capital expenditure through targeted investments in a bid to increase production in 2014. The company is also expected to continue funding growth opportunities in its key international assets, mainly in Oman and Qatar, and to complete the Al Hosn gas project in Abu Dhabi.
“Our capital program for the year will increase to about $10.2 billion, compared with 2013, which was slightly under $9 billion. Almost all of the increase will be in the oil and gas segment, including $400 million of additional capital to each of our California and Permian operations. We also expect to continue to fund growth opportunities in our key international assets, mainly in Oman and Qatar and to complete the Al Hosn gas project,” Stephen Chazen, CEO of Oxy, said in the company's annual report.
He said, “We anticipate that our Middle East business will generate more than $2 billion of annual free cash flow once the Al Hosn gas project becomes fully operational.”
In 2013, as much as 34 percent of Oxy's worldwide production - 258,000 barrels of oil equivalent per day (BOEPD) - came from its operations in the Middle East.
In October 2013, Oxy's board of directors authorised the pursuit of the sale of a minority interest in its Middle East and North Africa operations.
“The majority of our regional capital is deployed in our focus areas of Qatar, Oman and the UAE,” Oxy said in its report.H E Salim al Aufi, Undersecretary of the Ministry of Oil and Gas, recently said that Oman Oil Co would consider buying a stake in Oxy's assets in Oman if an offer is made. “Our understanding is that Oxy will continue to be the operator in Oman. Currently, it is just a due diligence that they are conducting, and no offer is on the table,” H E Aufi had said.
Oxy has operated in Oman since 1979 and is today the largest independent oil producer in the sultanate, with major operations in northern Oman and at the Mukhaizna field in the south.
The company said that its share of production from Oman was approximately 74,000 BOE per day in 2013.
“At the Mukhaizna field, where we are implementing one of the world’s largest steam flood projects, gross production has grown to 123,000 BOE per day - more than 15 times higher than the production rate in September 2005, when Occidental assumed operations. Our exploration programme in northern Oman is one of the most successful in Occidental’s history, with a discovery rate of more than 60 per cent,” the company said in its report.
A 30-year production-sharing contract for the Mukhaizna field (Block 53) was signed with Oman in 2005. By the end of 2013, Occidental had drilled more than 2,100 new wells and continued the implementation of a major steam flood project.
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