Shell Renews Block 6 Concession Agreement in Oman

The Royal Dutch/Shell Group of Companies welcomed the signing of agreements with the Government of the Sultanate of Oman which extend the term of Petroleum Development Oman's (PDO's) Block 6 concession. The agreements address the rights of the concessionaires, both Government and private investors, to carry out petroleum operations for oil in Block 6 for the next 40 years to December 31, 2044.

Block 6 is PDO's sole oil concession and is located in central and southern Oman. The company produces oil from around 100 fields in the concession area, which covers nearly 114,000 square kilometers.

PDO's current concession for Block 6 expires in 2012. The parties considered it prudent to extend the term of the concession now due to the long-term nature of investments that will be required in the coming years to increase production, particularly relating to water injection and enhanced oil recovery.

The Omani government owns 60 percent of Petroleum Development Oman. Shell owns 34 percent and is Technical Adviser to the company. Total S.A. holds four percent and Partex Oman Corporation holds two percent.

The agreements were signed in Muscat on behalf of the Government of Oman by His Excellency Dr Mohamed bin Hamed Al Rumhy, Omani Minister of Oil and Gas, and Malcolm Brinded, Executive Director Exploration and Production of the Royal Dutch/Shell Group of Companies.

Mr. Brinded said: "I am pleased to sign these agreements, which provide the certainty that the Government, Shell and the other private shareholders require to take PDO forward. There are huge resources in Block 6 but the reservoir structures in Oman are amongst the most geologically complex in the world. Their effective exploitation has always required a wide range of production techniques. As technical adviser, Shell has been able to provide leading-edge technology developed around the world and I am glad that this partnership can now continue for another four decades, contributing to Shell's global existing oil production."

Petroleum Development Oman is the major exploration and production company in the Sultanate. It accounts for more than 90% of the country's crude-oil production and, under an existing separate agreement, operates on behalf of the government nearly all of the country's natural gas supply. The first economic find of oil was made in 1962, and the first consignment of oil was exported in 1967.

In 2003, Petroleum Development Oman produced 702,000 barrels of oil per day and an annual total of 21.5 million barrels of condensate. The company also supplied 14.7 billion cubic meters of natural gas.