OMV: Green Light for Development of Block S2 in Yemen

OMV says that the Petroleum Exploration and Production Authority (PEPA) of Yemen and the ministry of oil & minerals have accepted OMV's Declaration of Commerciality in its operated Block S2 (Al Uqlah) in the Shabwa province of Yemen. The two-phased development plan could result in first oil production as early as Q3 2006 with a total production of 11,000 barrels per day (bbl/d). The field is expected to reach its full production rate of about 32,000 bbl/d by 2009/2010. Proven reserves amount to 50 mn barrels, and the field's production life will be about 20 years.

Helmut Langanger, OMV Executive Board member responsible for Exploration and Production stated: "The discovery of an oil field in a complex fractured basement reservoir is a huge technical success, thanks to our geoscientist team working closely with PEPA. The development of Block S2 is in line with OMV's targets to rapidly commercialise our discoveries and, therefore, increase our world-wide production. We will further strengthen our position in Yemen through comprehensive assessment of the remaining potential in this block and by exploration in the nearby Block 2."

The development area for the oil discoveries of Block S2 covers approximately 1029 square kilometers in central western Yemen. Block S2 is situated close to Block 2 (Al Mabar) for which OMV signed a Production Sharing Agreement on July 13, 2005.

Two-phased development

Due to the complexity of the reservoir, the joint venture partners and PEPA have approved a two-phased development plan. Phase 1 is designed to gather additional knowledge about the oil field, by modern technology such as 3D seismic. The data gathered during this phase will be used to define optimal development of the full field in Phase 2.

Production plateau of 32,000 bbl/day

Production start-up from Phase 1 is anticipated as early as Q3 2006. During this phase, oil production will gradually increase to a maximum of 11,000 bbl/d by 2007/2008. However, with full field development in Phase 2, a plateau oil production rate of 32,000 bbl/d is anticipated by 2009/2010. Currently, estimated proven reserves of about 50 million barrels should result in about a 20 year production life. The proven and probable reserves are estimated at 170 million barrels. Gross capital investment for Phase 1 is estimated at about USD 85 million. Current estimates for the full field development, including phases 1 and 2, are US $250-$300 million.

The interests in Block S2 are OMV (Yemen Block S2) Exploration GmbH with 44%; Sinopec International Petroleum Exploration and Production Corporation with 37.5%; The Yemen General Corporation for Oil & Gas with 12.5%; and The Yemen Resources Limited with 6% .

OMV has been active in Yemen since the early 1990s. The company has an office in Sana'a, Yemen, with 9 employees, including 3 expatriates.

Block S2 (Al Uqlah) was acquired with the international portfolio of Preussag. OMV assumed operatorship and discovered oil in the Al-Nilam-1 well in 2003. Then, following comprehensive block evaluation in 2004, the Habban-1 oil discovery was drilling in 2005. The Al-Nilam-ST1 successfully tested the potential of the fractured basement in another compartment of the Habban field.

A Production Sharing Agreement (PSA) for Block 2 (Al Mabar) was signed on July 13, 2005. Once the agreement has been ratified by the Parliament of Yemen, OMV will assume operatorship and commence exploration of the block.