Oilex advises that the Joint Venture covering onshore Block 56 in Oman (Oilex 25% interest and operator) has given notice of its intention to relinquish the entire Block 56 Contract Area following discussions with the Oman Ministry of Oil and Gas (MOG).
The decision to relinquish Block 56, which has been made in accordance with the Exploration and Production Sharing Agreement (EPSA), follows a detailed review of the prospectivity of the Block following exploration activities conducted over the past four years.
On behalf of the Block 56 Joint Venture, Oilex Oman Limited (as Operator) will proceed to close down Joint Venture activities to the mutual satisfaction of the MOG and the Joint Venture at the earliest reasonable date. The Joint Venture appreciates the cooperation of the MOG that has been extended in this regard.
The amount the Joint Venture has incurred on exploration and appraisal activities to date is in excess of the amount required to be expended under the EPSA.
The decision to relinquish Block 56 is consistent with Oilex's increasing focus on its onshore assets in India, its offshore exploration acreage in the North West Shelf of Western Australia and new ventures opportunities in India and South East Asia.
Block 56 Background
Block 56 is located onshore in South Oman. The Government of the Sultanate of Oman awarded the block to the Joint Venture in 2006 with the EPSA signed on 28 June of that year.
Three small discoveries were made in Block 56 arising out of the subsequent work program that was completed (Sarha-1, Ghadaq-1, Al Jumd-1). The Joint Venture has determined that those discoveries are not commercial to develop under the terms of the EPSA due to their small field size or heavy oil characteristics.
In recent months the Joint Venture has closely reviewed the remaining prospectivity of Block 56. The Joint Venture has determined that the exploration plays have been adequately tested and that further exploration activities are not commercially justified on the basis of prospect size and likely oil type. As a result the Joint Venture has determined to notify the MOG of their intention to voluntarily relinquish Block 56.
Oilex serves as the operator with 25% interest. Videocon Industries and GAIL India both hold 15% interest, and Bharat Petroleum and Hindustan Petroleum both hold 12.5% interest.