Supermajor Shell, along with its partners, has signed a concession agreement with Oman’s Ministry of Energy and Minerals to develop and produce natural gas from Block 10 of the Saih Rawl gas field. Shell’s partners in Block 10 are OQ and Marsa LNG which is a joint venture between TotalEnergies and OQ. The parties also signed a separate gas sales agreement for gas produced from the block. The two agreements follow an interim upstream agreement signed in February 2019.
Shell’s entry into this block signifies a further commitment to Oman while enhancing and diversifying the company’s gas supply. Block 10 is located in Saih Rawl in the Al Wusta Governate of Oman – around 250 miles from the capital of the country – Muscat. The block covers an area of approximately 460 square miles.
“These agreements represent a major step for Shell and our relationship with Oman. They generate value and strengthen our Integrated Gas business, which we need to deliver the energy Oman and the world need today. And we are looking at how Shell can help Oman with developing low-carbon energy in the future,” said Wael Sawan, Shell Integrated Gas, Renewables, and Energy Solutions Director.
The concession agreement establishes Shell as the operator of Block 10, holding a 53.45 percent working interest, with OQ and Marsa LNG holding 13.36 percent and 33.19 percent, respectively. For the initial phase, Petroleum Development Oman is building the infrastructure for the project, including the main pipeline to the Saih Rawl gas processing facility, on behalf of the Block 10 venture partners.
The venture will drill and hook up wells to maintain the production beyond the initial phase. The block is expected to reach production of 0.5 billion standard cubic feet of gas per day. Start up is expected within the next two years. Also, Shell and Energy Development Oman (EDO) signed an agreement to process the natural gas from Block 10 in EDO’s Saih Rawl facility.
“We share a long and strategic collaboration with Shell and our other partners. This project will further maximize the potential of Oman’s energy industry, in line with the Sultanate’s strategy to create growth opportunities across all energy streams and in line with Oman’s Vision 2040 priorities,” Mohammed Al Rumhi, Minister of Energy and Minerals in Oman, stated.
Shell and the government have agreed that, in parallel to the development of Block 10, Shell will develop options for a separate downstream gas project in which Shell could produce and sell low-carbon products and support the development of hydrogen in Oman. Any project would be subject to further agreements and future investment decisions. Also, TotalEnergies had another deal in Oman along with entering Block 10 via the Marsa LNG joint venture.
Namely, the French major first signed a deal to establish Marsa LNG before entering Block 10. TotalEnergies holds 80 percent in the JV while the only partner the Oman National Oil Company or OQ, in short, holds the remaining 20 percent.
Marsa LNG will produce natural gas from Block 10. Most importantly, it has a view to subsequently develop a low-carbon LNG plant in Sohar. Solar electricity will power the plant for the production of LNG for bunker fuel.