BP, Jordan Close to Risha Gas Field Development Deal

Dow Jones Newswires

AMMAN (Dow Jones Newswires), October 29, 2008

U.K. oil major BP PLC could sign a preliminary deal with Jordan to explore and boost production from the Kingdom's Risha gas field near the border with Iraq, the country's energy minister said late Tuesday.

"There are serious and advanced talks with BP to develop Risha gas field," Khaldun Qteishat told Dow Jones Newswires in an interview. "There is a possibility of signing a preliminary deal with this company." He didn't give a timeframe for signing the deal.

Qteishat said four international companies submitted bids to develop Risha. He didn't name the other three bidders, but a senior Jordanian energy official had previously said U.S. independent Anadarko Petroleum Corp. was among them.

The minister gave no further details about the value of the deal or its type and provisions.

A spokesman for BP confirmed talks are ongoing, but declined to comment on when they might reach a conclusion.

Risha gas field, which started production in 1989, currently produces 22 million cubic feet of gas a day. Jordan wants to increase production from the field to 300 million cubic feet a day by 2015. According to independent estimates, the field's gas reserves are between 0.5 trillion cubic feet and 1 trillion cubic feet, a Jordanian energy source said.

Jordan could sign the deal with other companies if negotiations with BP fail, Qteishat said. The winner is expected to explore the whole of the Risha block, which covers an area of 7,000 square kilometers.

Jordan is also in the final stages of striking a concession agreement with Royal Dutch Shell PLC to explore oil from the country's vast oil shale reserves, the minister said.

"We are about to complete what is called the commercial agreement (between Jordan and Shell) in English and Arabic," Qteishat said. The agreement has to be approved by the Jordanian cabinet before submitting it to the parliament to enact a law on the deal, he said.

The minister gave no further details on the oil shale deal.

Shell is expected to invest more than $20 billion in the project over 20 years. The project would cover an area of 22,000 square kilometers, a senior official from the state-run Natural Resources Authority had previously said.

The project could produce thousands of barrels of oil from oil shale, and the Kingdom holds some 40 billion metric tons of proven oil shale reserves, a figure which could be doubled.

Jordan had signed five memorandum of understanding with five companies to carry out technical and feasibility studies on Jordan's oil shale. The most recent one was signed with India's Oswal Chemical & Fertilizers Ltd.

Jordan, home to around 6 million people, imports some 100,000 barrels of crude oil a day, which constitutes around 95% of its energy needs.

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