* Gas find boosts Oman reserves by 9 pct
* Oil production seen rising to 940,000 bpd in 2013
By Saleh Al-Shaibany
MUSCAT, March 3 (Reuters) - Oman hopes to reach agreement inthe next few weeks on the price BP would get paid for gasproduced from the key Khazzan tight gas project, its oilminister said on Sunday.
BP has long been haggling with Muscat over the price for anygas produced from the project, which Oman needs to maintain gasexports and meet rising demand at home.
"Both the government and BP have disagreements, includinggas pricing, but I am confident that we will reach an agreementin the coming weeks for this project to go forward," Mohammadbin Hamad al-Rumhy said.
Omani gas production has risen sharply over the last decadeand the country remains a net gas exporter. But rampant domesticdemand means it must tap more costly gas deposits if it is tomaintain exports of liquefied natural gas (LNG) in coming years.
In a rare Middle Eastern move to slash fossil fuel subsidiesand encourage investment, Oman plans to double gas prices forindustry from around $1.5 per million British thermal units(mmbtu) in 2012 to $3/mmbtu 2015.
According to industry estimates, total upstream costs forconventional gas production from reservoirs are around $3/mmbtu,but the cost of trickier projects like Khazzan, where gas istrapped between rocks deep underground, are likely to be higher.
BP has already spent hundreds of millions of dollarsdeveloping the tight gas deposits in Block 61 in northern Omanand says commercial development is possible at the right price.
Non-OPEC oil producer Oman's proven gas reserves stood at33.5 trillion cubic feet (tcf) at the end of 2011, according tothe latest BP Statistical Review of World Energy.
Al-Ruhmy said on Sunday state-controlled PetroleumDevelopment Oman (PDO) had found another 2.9 tcf of gas and 115million barrels of gas condensate in the Mabrouk Deep field inexploratory drilling in 2012, Oman's state news agency reported.
PDO controls most of Oman's oil reserves and Royal DutchShell is the second-biggest shareholder.
Omani oil production has also been rising since 2007, thankslargely to enhanced oil recovery projects at existing fields,and is expected to hit 940,000 barrels per day (bpd) in 2013, upfrom an average 918,000 bpd in 2012, Al-Ruhmy said.
BP (BP.)
