Oman said yesterday it signed an agreement with Australia's Novus Petroleum to explore and produce oil and gas in northern Oman.

The Oil and Gas Ministry said in a statement that Novus Oman Ltd is expected to spend around $33 million on exploration work in blocks 15 and 47, an area of 9,928 sq km.

The statement said the firm had the option to extend the three-year agreement.

Novus currently operates in Oman's offshore Bukha gas-condensate field in block 8 and in block 17, situated on and around the Musandam Peninsula.

Omani officials have said the Gulf Arab state plans to invite more foreign firms this year to explore for oil and gas on a production-sharing basis.

Oman is an independent producer which pumps around 900,000 barrels per day of crude. The oil ministry has said it plans to raise output to one million barrels per day by 2004.