Occidental Petroleum Corporation’s (OXY - Free Report) subsidiary Occidental Petroleum of Qatar Ltd. (“Oxy Qatar”) has entered into an agreement with Qatar Petroleum to jointly work on the Phase 5 Field Development Plan (FDP) of the Idd El Shargi North Dome Field (ISND) offshore Qatar. Both companies will jointly invest approximately $3 billion for this project.
The agreement is a part of the Development and Production Sharing Agreement signed in Jul 1994 between the government of the State of Qatar and Oxy Qatar to construct the ISND. The joint exercise has already started and the companies will continue to maintain oil production levels at approximately 100,000 barrels/day through the next six years.
Oxy Qatar and Qatar Petroleum chalked out the schedules of the ISND Phase 5 FDP from the feedback obtained from the upgraded reservoir simulation models.
Per the agreement, Oxy Qatar and Qatar Petroleum will drill over 200 additional productions wells, utilize water injection method and install water source wells. The companies will offer allied facilities to support the additional wells. Further, both the companies will conduct pilot studies to support Produced Water Re-Injection and Enhanced Oil Recovery projects.
The main objective of the ISND Phase 5 FDP is to execute and/or upgrade the water-flooding practices in all of the oil producing reservoirs. The project will also enable Oxy Qatar and Qatar Petroleum to expand and fully utilize the existing contract reservoirs, while working jointly to optimize the long-term production and recoverable reserves.
Currently, global oil and gas companies are increasing their presence in Africa, Asia and Europe and sometimes teaming up with local players to discover unexplored reserves. Energy major Chevron Corporation (CVX - Free Report) announced the start-up of production from its first Angola liquefied natural gas project. TOTAL S.A. (TOT - Free Report) , another energy company, received the necessary approval from Nigerian National Petroleum Corporation for the development of offshore Egina field.
Royal Dutch Shell plc’s (RDS.A - Free Report) Nigerian joint venture – SPDC JV – decided to invest a total of $3.9 billion to develop two projects – the Trans Niger Pipeline loop-line and the Gbaran-Ubie Phase Two, both based in the eastern Niger Delta of Nigeria.
Occidental Petroleum has a strong presence in Qatar. The company operates in the Idd El Shargi South Dome Field and the Al Rayyan Field in Block 12. The company also has operations in Iraq, Libya, Oman, Qatar, United Arab Emirates and Yemen. We believe the steady progress at the high profile Al Hosn gas project in Abu Dhabi will likely boost the company’s future performance.
However, volatile oil prices and uncertainty associated with drilling results may challenge Occidental Petroleum’s financial performance in the future. The company currently has a Zacks Rank #3 (Hold).