The agreement provides for oil and gas exploration and production in Blocks 36 and 38 in the southern part of the country.
The pact was signed on behalf of the Sultanate's government by Dr Mohammed bin Hamad Al Romhi, minister of oil and gas, and on behalf of the Chinese company by Mou Shuling, its vice-president.
Provisions of the agreement commit Sinopec to carry out geological and geo-physical assessment, conduct a seismic survey and drill an exploratory well in the first three-year exploratory period.
The company will spend $22 million to finance the exploratory program and may extend exploration for an additional period to carry out a 3D seismic survey and drill three exploratory wells. In this case more than $29 million will be spent.
The Sultanate's government will bear no investment risk during the exploration period and the Ministry of Oil and Gas hopes the company's effort will result in the discovery of new oilfields.
In a statement, Nasir bin Khamis Al Jashmi, undersecretary of the Ministry of Oil and Gas, said the agreement was very important for the Sultanate.
He said Blocks 36 and 38 have a combined area of 36,000 square kilometers. He added exploratory operations had been carried out by some companies in these blocks in the past and since 1959 two wells had been drilled. However, he expressed confidence that new technologies coupled with Chinese experience would produce positive results.
He said Sinopec, which is fully owned by the Chinese government, had oil and gas operations in many areas around the world and also in neighboring countries and hoped the company's success stories elsewhere would be repeated in the Sultanate.
The undersecretary of oil and gas said the ministry had a plan to restore the Sultanate's previous oil production levels and efforts to that effect proceeded as planned.
Sheikh Abdullah bin Zahir Al Hosni, the Sultanate's ambassador to China, said Chinese investments in the Sultanate reached and estimated $800 million in a short period and that, he added, indicated the strong confidence in the Omani economy.
He further added that up to 31 Chinese companies currently invest in the Sultanate in sectors such as energy and services including road construction.
The ambassador said three companies from China operating in the sectors of oil, gas and petrochemicals were about to enter the Sultanate's market and he expected their combined investment to reach $600 million.
Mou Shuling, Sinopec vice-president, said he was pleased to have signed the agreement which was the first for his company. He said Sinopec was committed to ensure the success of the project.
In addition to investment in the oil sector, the company would expand cooperation with the Sultanate to include petrochemicals, training and exchange of expertise, he added.
He expected the company's investment to reach $500 million in the coming years.
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