BP Discusses Sale of More Than $1 Billion Stake in Giant Oman Gas Project

(Bloomberg) -- BP Plc is in early-stage discussions to sell about a 10% stake in a key gas field in Oman as part of the energy giant's plans to cut debt, according to people familiar with the matter.

London-based BP is talking with interested parties about cutting part of its 60% holding in the Khazzan natural gas field, the people said, asking not to be identified as the matter is private. The 10% stake is likely to fetch more than $1 billion and is drawing interest from other large energy companies, they said.

A stake sale would help BP deliver on its goal to achieve $15 billion in divestments by mid-2021 -- crucial for easing its debt burden. The company has bolstered its financial reserves as the double impact of the coronavirus pandemic and a crash in oil prices hit profits in the first quarter. In April, BP confirmed its commitment to completing the sale of its Alaska business to Hilcorp Energy Co. on revised terms.

No final decisions have been made, and there's no certainty the deliberations will lead to a transaction, the people said. A representative for BP declined to comment.

Khazzan is unique because it's one of the few fields outside the U.S. which uses the technology that kicked off the shale boom. While the rocks BP drills into aren't shale, the company has applied hydraulic fracturing to boost output at the site. BP's partner in the Khazzan field, Oman Oil Co., sold a 10% stake in the project to Malaysia's state oil company in 2018.

In the same year, BP and Oman Oil signed off on the second phase of the onshore Khazzan project, called Ghazeer. The new field is expected to start production in 2021 and boost overall output by 50% to 1.5 billion cubic feet (42.5 million cubic meters) a day, BP said at the time. Ghazeer was tied in to Khazzan in April, almost a year before it was scheduled to start producing.