Shell May Lose Oman Oil Field to Occidental
Royal Dutch/Shell Group, Europe’s second-largest oil company, may lose its rights to a 2.4-billion-barrel oil field in Oman because of a disagreement with the government over how to develop the deposit, officials familiar with the talks said Monday.
Westwood-based Occidental Petroleum Corp. and its partner, Abu Dhabi’s state-owned Mubadala Development Co., are in talks with the Omani government to take over production at the Mukhaizna field, the country’s sixth-largest, from Petroleum Development Oman, said the officials, who asked not to be identified. Shell holds 34% of Petroleum Development Oman.
Shell is seeking new fields after disclosing in January 2004 that it had overstated oil and gas reserves for years.
Larry Meriage, an Occidental vice president for communications, said the company was in talks with the government regarding an oil venture but would not elaborate.
In January, Petroleum Development Oman said it planned to invest $600 million to reverse the nation’s drop in output, which is expected to bottom out at 635,000 barrels a day this year.
Oman needs billions of dollars of investment to reverse a four-year decline in crude oil production. Its oil may be exhausted within 20 years unless new fields are tapped, according to the U.S. Energy Information Administration.
State-controlled Petroleum Development Oman has delayed investing billions of dollars into increasing Mukhaizna’s output to about 100,000 barrels a day from 15,000 barrels a day because the field contains heavy oil, the officials said.
That type of oil is thicker in consistency than light crude and worth less on the international market because it is more difficult to refine.