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Bloomberg: Oman Signs Two Agreements to Raise Oil Field Output (Update1)

By Glen Carey

May 28 (Bloomberg) — Petroleum Development Oman, a state- owned company in which Royal Dutch Shell Plc is the largest foreign investor, signed two agreements to increase output from the aging Qarn Alam oil and gas field through steam injection.

Dodsal Group, an Indian construction company based in the United Arab Emirates, will drill 150 wells and build a water treatment plant at Qarn Alam, Petroleum Development Oman said in a statement late yesterday.

Galfar Engineering & Contracting Ltd., a closely held oil and gas services company in Oman, won a contract to install water flow lines. About 220 kilometers (136 miles) of new pipelines will be laid to handle increased production from the field.

Oman, the largest Arab oil producer that isn’t a member of the Organization of Petroleum Exporting Countries, is seeking the help of international oil companies to improve output. The country’s oil production fell from 961,000 barrels a day in 2001 to 780,000 barrels in 2005, according to BP Plc.

The project will start in 2010, raising the oil and gas recovery rate to 28 percent from 7 percent, the Times of Oman reported today, citing Nasser bin Khamis Al Jashmi, an undersecretary at the Ministry of Oil and Gas.

The Dodsal contract is valued at $450 million and the Galfar contract at $138.5 million, the Muscat-based newspaper said.

Calls to the ministry today by Bloomberg News seeking comment on the report weren’t immediately returned.

Shell owns 34 percent of Petroleum Development Oman, Total SA 4 percent and the Omani government 60 percent.

To contact the reporter on this story: Glen Carey in Dubai at [email protected]

Last Updated: May 28, 2007 04:20 EDT

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