Reuters cited Mr Jonathan Evans GM of BP Oman as saying that UK oil major BP will make a final decision on going ahead with a potential USD 15 billion investment in Oman's Khazzan tight gas project in February 2013.

Mr Evans said that BP which won the concession in 2007 and has spent about USD 700 million on it to date will land a field development plan including expected costs in early 2012. The plan will serve as the basis for gas sales agreement talks with the Omani government next year.

He said that the final investment decision is in early 2013. If we don't reach an agreement by then we either have to ask for an extension or do something else.

The Omani government has said that the gas must be sold in Oman where sale prices are tightly controlled. Huge price subsidies in the energy sector are very common in the Middle East. The project will make a lot of money for Oman; we just need to find a way to get a big enough piece of it for BP to make sense as an investment.

In June, Mr Bob Dudley CEO of BP said that high costs could scupper the project if BP is not able to agree a high enough price for the gas produced to compensate for these. In the Gulf, prices can be as low as USD 1.50 per million British thermal units far below the USD 17 per million British thermal units paid by buyers in Asia.

(Sourced from Reuters)