Malaysia’s Petroliam Nasional Berhad (Petronas) said its subsidiary would buy a 10% stake in Oman’s Al Khazzan gas field, following a bidding exercise held by the exploration arm of state-owned Oman Oil Company.

The Petronas unit, PC Oman Ventures Ltd, would acquire the stake in Block 61 of the field, which is expected to produce around 1.5 billion cubic feet of natural gas per day by 2020.

Oman Oil Company Exploration and Production (OOCEP) said in a statement on Twitter that the sale was “subject to approval from the Sultanate of Oman’s government and other closing conditions”.

OOCEP holds a 40% stake in the block, while Britain’s BP holds the remaining 60%.

The deal could be worth in excess of US$1.3 billion to OOCEP, Oman’s state-owned oil company,” said Liam Yates of Wood Mackensie’s Middle East upstream team. “The consideration will be important for the company as spending on Khazzan’s second phase, Ghazeer, ramps up.”

He also noted that OOECP in 2013 paid $136mn for a 10% stake in the first phase of development. “The stake is now worth US$1.3 billion (NPV10, October 2018),” he added. “The value reflects the significant cost savings achieved and reserves expansion following sanction of the second phase of development earlier in 2018.”

“Petronas is no stranger to Oman, having held exploration acreage adjacent to Khazzan until 2014,” said Max Petroc, from Wood Mackenzie’s corporate analysis team.“The announcement highlights Petronas’ strong appetite for international business development and gas resource capture, coming less than six months after it joined Shell’s LNG Canada project.

“We believe the company is buying into the project for its strong gas reserves potential. The size of resource on Block 61 means that future phases could be developed, beyond the current expansion, provided the partners can secure a buyer for the additional gas.”

Wood Mackenzie estimates that the 10% stake in Khazzan field would contribute 2% of Petronas’ global output by 2023.

“Khazzan recently celebrated one year of gas delivery in Oman, with field output around 1 billion cubic feet per day,” Yates said. “When Ghazeer comes onstream in the early-2020s, output will increase to 1.5 billion cubic feet per day.”