OMAN MOVES TO EXPAND INDUSTRY OPERATIONS

Oman has agreed to expand petroleum industry ties with Caltex Petroleum Corp. to include several joint refining and marketing deals in Asia. Under a preliminary agreement signed last month, the Omani-Caltex combine is to cover activities and projects in Caltex areas of operations where the two hold interests. As a first step, Oman and Caltex formed CXO Ltd. to join the Petroleum Authority of Thailand (PTT) in building a 130,000 b/d grassroots refinery at Map Ta Phut, Thailand. The $1.9 billion

May 3, 1993

3 min read

Oman has agreed to expand petroleum industry ties with Caltex Petroleum Corp. to include several joint refining and marketing deals in Asia.

Under a preliminary agreement signed last month, the Omani-Caltex combine is to cover activities and projects in Caltex areas of operations where the two hold interests.

As a first step, Oman and Caltex formed CXO Ltd. to join the Petroleum Authority of Thailand (PTT) in building a 130,000 b/d grassroots refinery at Map Ta Phut, Thailand. The $1.9 billion Star Petroleum Refining Co. plant is to be owned 64% by PTT and 36% by CXO.

Oman is to support the Thai refinery with as much as 80,000 b/d of Omani export blend crude oil. Caltex and PTT are to share the plant's output and sales of its products into Thai markets.

CXO is owned 60% by Caltex and 40% by Oman Oil Co. Ltd. Caltex a joint venture of units of Chevron Corp. and Texaco Inc., operates in 58 countries in the Eastern Hemisphere.

In a related action, Oman and Caltex agreed to study the feasibility of building a 120,000 b/d refinery in India to be owned jointly with the Indian government. Two possible sites are being considered for joint development:

In Central India with Bharat Petroleum Corp. Ltd., an option that would include a 600 km overland oil pipeline to link the plant with a crude oil terminal on the Gulf of Kacch on India's West Coast.
On the West Coast of India with Hindustan Petroleum Corp. Ltd.

In either project, the state company and its joint venture partners each would hold a 26% equity interest, with the remaining 48% interest offered to private investors (OGJ, Sept. 21, 1992, p. 25).

Oman and India also agreed to study the feasibility of jointly designing, building, and operating a gas pipeline system from Oman to India. The deal would include a long term take or pay gas supply contract and expansion of India's gas distribution grid. Some supplies could be targeted to specific users.

DIVERSIFIED INDUSTRY

Oman intends to diversify its energy sector to broaden the country's economy and provide jobs for Omanis.

Oman Oil is to oversee petroleum projects outside the country. Oman Oil Co. LLC, a unit of Oman Oil, is to lead development of Omani hydrocarbons.

Increased cooperation with Caltex and formation of CXO is intended to bolster Oman Oil's goal of expanding its global refining and marketing to assure long term outlets for Omani oil exports.

In addition, Oman Oil recently:

Helped Oman, Russia, and Kazakhstan form a group to build and operate a large diameter, 1.5 million b/d oil pipeline from western Kazakhstan to the Black Sea port of Novorossiisk. The three countries are to own equal shares of the project.
Provided technical assistance to help Kazakhstan and Chevron agree on a plan to develop supergiant Tengiz oil field. The deal was concluded early in April.
Struck an exploration and production sharing deal Apr. 8 covering a 16,000 sq km area in the pre-Caspian basin of western Kazakhstan. More than $75 million is to be spent on exploration, which is expected to delineate 1.1-1.5 billion bbl of reserves.

Oman Oil also has helped settle two short term loans to Kazakhstan repayable in oil and with similar terms. The former has been fully repaid and the latter concluded in March 1993.

In addition, Tomskneft Production Association let a contract to Oman Oil to repair wells in western Siberia.