Out-Law News 1 min. read

Oman to tender five oil blocks in October

The government of Oman will begin tendering "around five" oil blocks on a production-sharing basis in October, the Times of Oman has reported.

The blocks have both oil and gas deposits but are mostly oil blocks, and are in different parts of the country, the newspaper reported.

"There are a number of locations. We are evaluating few of them and in October we will go to the market. I would probably say an average of five, but we (may) have more or less, depending on the readiness of data collection and evaluation," Salim bin Nasser Al Aufi, undersecretary at the Ministry of Oil and Gas, told the Times of Oman.

The country will have to be "smart in negotiation", given the current low price of oil, Al Aufi said.

"We need to recognise that companies will be using lower oil production forecasts when they bid and to be smart enough to accept it today. Also, we have to introduce mechanisms in such a way that we gain from the deal when oil prices go up," he said.

The majority state-owned Petroleum Development Oman currently contributes 68% of Oman’s total crude oil production, while the remaining 32% is produced by national and multinational oil firms. The average crude oil production target this year is estimated at 990,000 barrels per day, slightly higher than 980,000 barrels per day in 2015, according to the newspaper.

The International Energy Agency (IEA) said in February that the global glut of oil that has developed over the past year will remain until 2017, along with accompanying low oil prices.

In its annual Medium Term Oil Market report the IEA said that the oil market has changed "dramatically" since last year's report.

The stock building of the past three years has been the highest since 1994-1999, and prices have fallen to levels last seen in 2003.

The IEA also said in January that the world oil market could "drown in oversupply" as Iran's oil comes on stream, bringing a third successive year when supply will exceed demand by 1 million barrels per day.

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