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A positive environment for investment

Building an industrial facility the size of a small town in the middle of the desert and in less than four years would not be possible in a country that did not have a business-friendly environment and talented people. The Sultanate of Oman boasts both of these attributes and more – and BP is proud to have been doing business here for many years.

UK businesses considering doing business in Oman will find great capability and dedication. It is a youthful and tolerant country. English is widely spoken. At a time of rapid change throughout the world, Oman manages to embrace the challenges and opportunities this brings alongside great respect for its own rich heritage. 

At a strategic level, while oil and gas remains important to its economic future, the country is set on a course of diversification – and the private sector is recognised as a crucial part of that. Enhancing the business environment, encouraging growth of the SME sector, improving government efficiency and modification of the Foreign Capital Investment Law will facilitate this. Raising education standards is also underway and will enhance local employment opportunities in the private sector. While the Duqm Special Economic Zone (SEZAD) is being developed as the biggest such area in in the Middle East and will become a major marine, logistics and industrial hub for Oman and the wider region.

BP in Oman

BP’s purpose is to provide heat, light and mobility solutions for a changing world. A world which is seeing rapid population growth, increasing demand for energy and a transition to a low carbon economy. The energy mix is shifting towards lower carbon sources, driven by technological advances and growing environmental concerns.

Our business in Oman is a key part of this transition. We have in fact, in one form or another, been closely involved for almost a hundred years with the development of hydrocarbons in Oman. First oil, then gas was discovered at various locations across the country and BP’s presence has now grown to encompass a range of associated businesses which make a significant contribution to the economy and society at large.

Our main area of activity today is the production of natural gas. Reliable gas supplies are vital for both the transition to lower carbon energy and for the aforementioned diversification into energy-intensive industries like petrochemicals, steel and aluminium. In addition to gas production, BP also operates several ‘downstream’ businesses, including:

Fuel Bunkering
BP Oman provides a fuel storage and supply service from the port of Salalah in southern Oman. This is managed by a company called BP Marine, which was founded in 2003 and is a vital service for long-distance ships, which call at the port to take on fuel for their journeys.

Lubricants are distributed through the Oman Oil Marketing Company (OOMCO) which markets both BP and Castrol brands through a network of OOMCO-branded forecourts, LubePlus sites and high street retailers. 

Technical Services
Air BP has an agreement with OOMCO to provide technical advice, training and management services related to aviation operations and marketing.

PTA License Technology
BP Oman entered into a licensing agreement with Oman International Petrochemical Industries Company (OMPET) in 2015 for BP’s latest generation purified terephthalic acid (PTA) technology, building a 1.1 million tonnes per annum unit at Sohar. 

Calcined Coke
BP supplies Sohar Aluminium with calcined coke – a key element in the production of aluminium anodes.

History of the Khazzan gas development

Around a decade ago, BP became involved in appraising the Block 61 concession area in south-central Oman for potential gas production. This was a remote area where gas reserves were known to exist, but in challenging geological conditions, some five kilometres below the desert surface.

A successful appraisal process saw BP awarded an Exploration and Production Sharing Agreement to explore for and produce gas from the area, which was then revised in 2013. A Joint Venture was set up, with BP having a 60% interest. Oman Oil Company for Exploration & Production holds a 30% interest and PC Oman, a wholly owned subsidiary of Petronas holds 10%.

This was to become one of the biggest ‘unconventional’ gas projects in the Middle East and BP’s largest-ever investment in Oman. It was also one of BP’s most technically-challenging and significant projects globally.

Getting to First Gas

From scratch, the equivalent of a small town had to be built, with people, materials and expertise all brought in from outside the area to do so. An entire infrastructure of transport links, utilities and accommodation was built even as drilling was beginning. This included over 400 km of pipeline; a two-train Central Processing Facility; key infrastructure such as roads, IT and telecoms networks, water provision and accommodation; and the drilling of an initial 50 wells. At peak times, the workforce numbered 13,500; over 100 million hours of work were logged and over 100 million kilometres driven.

In September 2017, just three and a half years after that work began, the first gas began to flow from the field. This marked the end of the first phase of project and, to the credit of all parties involved, was delivered ahead of schedule and below budget. 

Khazzan currently delivers around 1 billion cubic feet of gas a day, which is fed into the government gas pipeline infrastructure for distribution, and 29,000 barrels of condensate each day.

Looking to the future

In April 2018, the second phase of Khazzan field development, called Ghazeer, was sanctioned. Development work is well underway here with around 100 wells due to be drilled over the project lifetime to access it. The Ghazeer project is expected to come onstream in 2021 and deliver an additional 0.5 billion cubic feet per day and over 15,000 barrels of condensate per day.

Looking further afield, BP and ENI recently signed a Heads of Agreement with the Government of Oman to access Block 77. This block, with a total area of almost 3,100 km2, is located in central Oman, 30 km east of Block 61.

Our wider contribution to Oman (In Country Value)

BP Oman’s overall goal is to create a sustainable legacy of tangible value – giving something back to the country in which it operates. A legacy that supports Oman’s strategic goals for energy security and long term economic diversification, while empowering local people, helping create a self-sufficient and progressive future.

The diversification and modernisation of Oman’s economy must be delivered along sustainable lines. There are two primary reasons. At the domestic level, the driver is mainly demographic. It centres on the need to increase both the number and quality of employment opportunities for a rising, increasingly young population. At the global level, changing energy demand makes industrial diversification at home a prudent safeguard of Oman’s future prosperity. 

BP is proud to be supporting Oman in this regard and does so via an In Country Value programme that has three main strategies: supporting local business growth and overall economic productivity; encouraging the development of Omani skills and capability; and generating employment and training opportunities.

Working with Omani suppliers
Contracts have been awarded across a wide variety of areas at Khazzan since the beginning of project development: everything from access road-building and other basic infrastructure provision to on-site catering and security. Specialist drilling, well stimulation and pipeline manufacture along with a myriad of other technical services were needed before gas production could begin. Around 40% by value of contracts have contributed to ICV since the start of the Khazzan project, while currently, 89% of contracts by number are held by Omani registered companies (end 2018).

While BP aims to award contracts to local businesses wherever possible, its focus is also on building capability to the benefit of the wider industrial sector. To aid this, a dedicated Vendor Development Programme exists to help suppliers build their abilities and management standards to international levels. As such, it plays a vital role in raising tender bidding performance for local firms though improving their competency. Complementing this, a Joint Supplier Registration System improves and enhances the participation of local suppliers in the tendering and selection process.

Omanisation and capability development
Some 77% of BP Oman employees are Omanis – the aim is for that to reach 90% by 2025. Exciting career opportunities, world-class training and development and an inclusive working culture are strong attractions offered by BP in Oman – and through these we are able to hire some of the best and brightest talent in the Sultanate. 

Over 60 Omani graduates have been recruited to date via the Graduate Challenger programme launched in 2010. They will enjoy tailored career plans as well building skills in other disciplines.

The Technicians Training Development Programme was set up in 2012 to recruit Khazzan’s engineers of the future. In 2018, 20 further technicians joined the 80 who had previously graduated from the programme. The technicians have now joined the teams on-site at Khazzan and will be responsible for supporting the running of the operation and ongoing development.

Working abroad is a recognised way to gain and share knowledge and experience. In 2019 BP Oman has around 20 staff working in one of BP's worldwide operations, helping boost their capabilities.

An increased focus on diversity and inclusion has resulted in a 40% increase in females being taken on by the business between 2017 and 2018.

Social Investment Programme
BP Oman’s Social Investment Programme (SIP) celebrated its fifth anniversary in 2018 – around 55,000 people from across Oman have now benefitted from the over 70 initiatives that have made up the scheme so far. 

The young, entrepreneurs and communities are the main targets and the 2018/19 programme aimed to build on the greater integration and connection between the different initiatives begun in 2017. This fifth edition of the SIP featured 19 initiatives and involved 14 partners, with the initiatives falling into three themes – Enterprise Development, Education and Energy Sustainability:

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