Meethaq signs agreement to finance oil and gas project in Oman

Oman BlockThe company plans to triple the production from Block 7 in the short-term. (Image source: yaruman5/Flickr)Meethaq, the pioneer of Islamic banking in Oman from Bank Muscat, has signed an Islamic project financing facility with Hydrocarbon Finder E&P LLC (HCF) for the development of HCF’s oil and gas fields in Block 7 of Oman

HCF took over the operatorship of Block 7 in April 2016 under an exploration and production sharing agreement signed with the government of Oman. Since then, HCF undertook a low cost, high yield development programme to revive production from the discovered fields in the Block and more than doubled the production within a span of 18 months. Block 7 is located on the south Rub Al Khali (Empty Quarter) basin and has been producing hydrocarbons for the last three decades.

Sulaiman Al Harthy, deputy CEO of Meethaq Islamic Banking, said, “Meethaq’s association with the project comes as part of its commitment to spotlight investment opportunities in core development sectors across the Sultanate. Meethaq recognises investment prospects and potential that Oman offers and is committed to supporting strategic national development initiatives in line with Oman's Vision 2040 economic blueprint.”

Sulaiman Mohammed Al Adawi, brig gen (retd), remarked, “As a part of this diversification strategy, the group ventured into the upstream oil and gas sector through Hydrocarbon Finder in 2015. The timing of entering into the sector in a low price environment meant that HCF is able to execute its development activities in a cost efficient manner.”

“We are happy with the support and commitment shown by Meethaq Islamic Banking to HCF’s project and look forward to a long and mutually beneficial relationship with the bank,” he added.

Speaking on the occasion, Mohammed Al Jahwari, CEO of HCF, said, “With the low oil price environment there is a renewed interest to develop matured fields using the latest available technology to minimise risks and maximise returns. HCF undertook this low cost development model by investigating and reinstating the integrity of existing wells followed by side-tracking of existing wells over the last 12 months. This has led to production contribution from previously unproduced reservoirs within existing fields of Block 7. This is to be followed by an exploration campaign targeting deeper horizons that have been producing in other parts of Oman.”

HCF expects to add reasonable volumes of incremental oil and gas reserves in due course. According to the company, there are immense development opportunities in Block 7 and HCF aims to maximise the production of hydrocarbons from this block. HCF intends to invest up to US$160mn towards development activities in a phased manner. In addition to employment and business opportunities for a number of citizens and SMEs in Oman, HCF’s project will also contribute positively to government revenues from incremental oil production.

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