Occidental Petroleum Corp. added to its Middle East portfolio Wednesday with an agreement to develop a pair of small oil and natural gas fields in Abu Dhabi, the largest of the United Arab Emirates.
The company's preliminary pact with Abu Dhabi National Oil Co. gives Occidental full ownership and operational control of development projects in Abu Dhabi fields called Jarn Yaphour and Ramhan. Westwood-based Occidental said it would invest about $500 million for development and additional project appraisals over the next three to four years.
The Jarn Yaphour field is expected to initially produce the equivalent of 10,000 barrels of oil a day, beginning next year. The shallow-water Ramhan field also is expected to produce the equivalent of 10,000 barrels of oil a day, starting as early as 2011.
The combined initial production amounts to 3% of Occidental's estimated 2008 oil-equivalent production rate of 600,000 to 620,000 barrels a day.
"For Oxy, it is too small to move the needle, but it's a step in the right direction," said Fadel Gheit, oil analyst at Oppenheimer & Co. But, he said, "you can start very small and then you can grow."
Although the production gain is small, it is "an important step" for Occidental, Chief Executive Ray R. Irani said. "The development of these two fields provides an exciting opportunity to create value for the people of Abu Dhabi."
Occidental shares traded as high as $57.78 before closing at $54.55, up 67 cents, or 1.2%.