The small oil-exporting country is keen to tap unconventional gas fields to meet rapidly rising demand from Omani industry and power plants.

BP began appraising the Khazzan Makarem gas project in Central Oman in 2007, but has yet to decide whether to go ahead.

“In 2012 we will take a decision whether to go ahead with full field development or abandon it,” Robert Clark, senior petroleum engineer at BP Exploration in Oman said.

“The government of Oman is very anxious to get the project going as the gas find is large,” he said, declining to say how much gas might be available.

If the project goes ahead, the minimum project investment would be $5 billion, he said, adding that BP had invested close to a $1 billion already.

Field appraisals are ongoing, with eight wells drilled so far, but only two have flowed at commercial rates with one still to drill, he said.

“Implementing the technology is difficult,” he said, adding that the economics of such a project were still being studied.

The Oman government has said the gas must be sold in Oman where sales prices are tightly controlled by the government. 

Oman produces some 2.5 billion cubic feet per day (bcfd) of gas, of which half is exported as LNG to Japan and Korea and the rest consumed internally, Yousuf Mohammed Al-Ojaili, CEO of Oman Gas Company said.

“Oman is very serious about developing unconventional gas with good quantities of test gas being produced,” he said, adding there is more focus now on developing gas prospects for local use, rather than for export.