Maximised production in Oman

What is your assessment of the domestic oil and gas sector’s current uptick and the role Tethys will play in it?
Magnus NORDIN: Oman is experiencing a positive upstream momentum with several E&P companies having increased activities in the country with new drilling campaigns either planned or about to start, oil exports that grew by more than 15% in 2022 and a daily average production that reached 1.06 million bopd in the first nine months of 2022.
Tethys has been active in the sultanate since 2007 and the pandemic represented an opportunity to consolidate our presence in the country, where now some important global energy players have returned and which is experiencing a number of new entrants too thanks to the leadership role the Ministry of Energy and Minerals is playing in bringing the country forward.
We are perfectly aware of the complex geology and mature nature of the country’s oilfields, but throughout the last 15 years and having worked in various partnerships we have accumulated significant experience, which is helping us to think outside the box when it comes to how to approach the Omani subsurface, as well as providing us with a role to play in further unlocking the country’s energy potential.

What is your approach to promoting the development of local capabilities?
MN: Within Tethys it is perfectly natural to work with local talent as it is part of our core business model and it is a choice we made since we started our activities in Oman, initially working as a partner and then also as an operator. Our Omanisation rate stands at around 85%, with Omanis holding key positions within our Oman office and the promotion of in-country value is fully aligned with Tethys’ modus operandi.

Fredrik ROBELIUS: We have been focusing on local talent since the beginning and we have continued down that path by partnering with local universities and sponsoring both master’s and PhD students, with some past students we supported now working with us.

Can you give us an overview of your key activities?
FR: We are an onshore-focused upstream company, and our primary aim is to explore for and produce oil. Oman has several benefits for any oil company investing in the country – from its geographical location on the Indian Ocean side of the peninsula (as opposed to the Arabian Gulf side) to its longstanding reputation as a reliable supplier and consistent oil exporter.
Tethys is a partner in blocks 3 and 4, where we have a 30% interest and work with CCED, which holds a 50% operated interest, and Mitsui, which holds 20%. As of today, our entire production, which is non-operated, comes from these two blocks. In November 2022, this amounted to a net share of 278,288 barrels of oil, corresponding to 9,276 bopd.
Then, we have activities in three other blocks: Block 49, where we have 100% ownership and were granted an 18-month extension of the initial exploration phase, which will now last until December 2023; Block 56, which has been the target of a number of exploration wells following the promising Al Jumd discovery; and Block 58, where the concession is being prepped for a drilling programme.

How does Tethys secure access to funds for financing its upstream activities?
MN: The oil and gas industry is highly capital intensive and the leap from exploration to production is both expensive and time consuming. However, we are financially solid, as we have a robust free cashflow from blocks 3 and 4. We are reinvesting the money we get from those two assets into our other blocks and, at the moment, we have USD 14 million in the bank for their exploration phases.
Looking ahead, further developments could require additional finance, particularly if there is the possibility of early production. If you are in the position to show to either banks or capital markets that you made an oil discovery, it is easier to get access to funds.

How does Tethys position itself along the energy transition path?
MN: We are not a production company yet, and this allows us to be in a favourable position for ensuring sustainability from the very beginning. In fact, if the exploration phase in our blocks turns out to be successful, we will start moving on with the development phase from scratch, meaning that we can start implementing very environmentally friendly actions from day one.
Instead of taking on an old field where you may have to spend a lot of money to upgrade facilities, pipelines and solutions to cut flaring – we can develop production from the start in parallel with the use of state-of-the-art green technology and be more sustainable from the earliest days of our activities.

What are your expectations in terms of opportunities arising from the concessions you’ve been working on?
MN: Oman is promising in terms of hydrocarbons resources, and large parts of its territory are still underexplored. We have quite a high-potential acreage position, on both our southwestern and southeastern sites, and we see some interesting opportunities in the area between the sites. That is why we have spent most of 2022 conducting seismic surveys and preparing for exploration drilling.

FR: In 2023, we plan to conduct an extended well test in Block 56 while, in parallel, we will be drilling exploration wells in both blocks 56 and 58 as well as retesting the well we have in Block 49.
It is premature to quantify in numbers the reserves and the output that we expect from blocks 56 and 58, but we are confident in them and optimistic about their potential.

Can you walk us through the scenarios ahead for the company and its growth plan for the next two years?
FR: If the exploration is successful, our production will increase by a significant order of magnitude over the next few years. If it fails, we will assess the other opportunities stemming from an expansion of blocks 3 and 4 to understand which we should focus on.
The whole of 2023 and most likely 2024 too will see us focused on trying to develop blocks 49, 56 and 58 as we believe in their potential and if we are backed by positive exploration results, it will be a matter of monetising it as quickly as possible by jumping into production. That will strengthen our cashflow, enabling us to build a growing production curve and, as already mentioned, starting development from scratch will put us in a position to adopt a very sustainable approach from day one.
This is our growth plan for the coming years, which has identified transforming into a production company and focusing our energy on maximising extraction as the best way forward.