Oil major BP Plc agreed on Feb. 1 to sell a 20% stake in Oman’s Block 61 to Thailand's PTT Exploration and Production (PTTEP) for $2.6 billion.

The London-listed firm said it would continue as an operator of the block, which contains a large tight-gas development in the Middle East, with a 40% interest.

“We are committed to BP’s business in Oman—this agreement allows us to remain at the heart of this world-class development while also making important progress in our global divestment programme,” said BP CEO Bernard Looney in a statement.

Block 61 already had two phases of development—Khazzan tight gas project, one of the largest upstream projects in the small Gulf state, and Ghazeer project which began production in October, according to the BP release.

Following completion of the transaction, participating interests in Block 61 will be: BP, 40%; OQ, 30%; PTTEP, ‎‎20%; and ‎PETRONAS, 10%.‎

Analysts with Tudor, Pickering, Holt & Co. (TPH) said the deal, expected to complete in 2021, is likely to be a driver of achieving net debt targets.

“With the deal, we estimate the company could achieve its net debt targets by Q3’21, should it close by mid-year or in the third quarter, with the potential for share buybacks kicking off in Q4’21 as a result,” TPH analysts wrote in a Feb. 1 research note. “Following plans to prune the upstream and downstream portfolios in the coming years, we expect to hear more in the coming quarters on incremental disposals following a stabilization of global oil prices in the $55/bbl Brent range.”

BP is targeting divestment proceeds of $25 billion by 2025. Most recently, the company completed the $5 billion sale of its petrochemicals business to INEOS at the end of 2020.‎

Hart Energy staff contributed to this article.

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