April 29,2003
Gas sales agreement with the Omani Government
Mitsui Oil Exploration Co., Ltd. ("MOECO") and Mitsui & Co., Ltd. ("Mitsui") are pleased to announce that Mitsui E&P Middle East B.V. ("MEPME"), a 40/60 incorporated joint venture between MOECO and Mitsui, together with Occidental of Oman, Inc. ("Occidental") have reached an agreement with the government of the Sultanate of Oman to sell natural gas produced from Block 9, an onshore oil concession in Oman. Occidental signed the Gas Sales and Purchase Agreement with the government of the Sultanate of Oman on behalf of MEPME and Occidental on April 29th, 2003. This will lead to the first domestic gas sales project ever to be implemented by a Japanese company in the Middle East.
Occidental and MEPME expect the development period to take up to 15 months and plan to sell the gas to the Omani Government beginning mid-year 2004. The initial average sales volume is expected to be approximately 120 to 130 million gross cubic feet of natural gas per day (equivalent to more than 20,000 barrels of oil per day).
Block 9 is currently producing approximately 45,000 barrels of oil per day, and this gas sales agreement will enable Occidental and Mitsui to commercialize a portion of the associated gas that is currently being re-injected to the reservoirs or is otherwise not capable of being used. The gas sales agreement also takes into consideration the possibility of selling gas from Block 27, a nearby exploration concession, should gas be discovered there in the future.
Block 9 is operated by Occidental, which holds a 65% interest. MEPME holds the remaining 35%. Occidental currently holds 100% interest of Block 27, but signed an agreement with MEPME on October 9, 2002 to sell a 35% share to MEPME, which is currently awaiting approval of the government of the Sultanate of Oman.
MOECO which plans to expand into the Middle East and North America in addition to its core asset, the offshore Gulf of Thailand gas project, and will further strengthen its profit base with this Omani project.