Status of PSA oil and gas contracts in Turkmenistan in Dec. 2010

Turkmenistan, Ashgabat, Dec. 16 / Trend H. Hasanov /

Foreign direct investments on PSA contracts in Turkmenistan is expected to reach $4 billion in 2010. More than $2 billion were invested in 2008, and roughly $866 million in 2007.

Companies from Russia, Great Britain, Germany, Italy, Malaysia, the UAE, Canada and China are working in Turkmenistan on the basis of a PSA contract.

Petronas, Dragon Oil, Burried Hill, RWE, ITERA companies were involved in the development of the Turkmen section of the Caspian Sea.

Status of PSA offshore oil and gas contracts in Turkmenistan in December 2010

About 32 license blocks participate in the tender.

Block 1

The PSA contract was signed in 1996. The operator is the Petronas Charigali Malaysian State National Company.

The contract area includes Diyarbekir, Magtymguly, Ovez, Mashrykov and Garagol Deniz. Proved reserves are at least 1 trillion cubic meters of gas, more than 200 million tons of oil and 300 million tons of gas condensate. The area of the contract territory is 1,467 square kilometers.

Project Status

Petronas total investment since the project's start exceeded $2.3 billion. Oil industrial production and exports began in May 2006. Associated gas exports will launch in 2010 - up to 10 billion cubic meters annually. The transportation route is through Azerbaijan and Iran. The company has drilled 30 exploration, appraisal and development wells. All showed significant hydrocarbon inflows.

Block Cheleken

The PSA contract was signed in 1999. The operator is Dragon Oil of the United Arab Emirates and Great Britian.

The total area of the contract territory is about 950 square kilometers. It includes the deposits of Jeitun, Jigalybek and Chelekenyangummez. Proven reserves at the block are about 85 million tons of oil and 62 billion cubic meters of gas.

Project Status

The company actively sells Turkmen oil via Azerbaijan and Iran and reached a one million point of oil production in 2005. By 2010, production will increase 10 times to 3.65 million tons per year.

About $2 billion have been invested. In 2010 Dragon Oil PLC plans to increase investmensts by $600-700 million. In 2009, the amount of investments hit $450 million.

Oil and gas are extracted from 58 wells; 36 have been drilled since 2000. Average daily oil production has increased almost six times - from 8,000 to 47,000 barrels of oil per day. From 2009 to 2011, more than 30 wells will be drilled.

About 12 oil drilling platforms, pipelines and an oil tanker are being reconstructed under the project. Coastal structures for storing and processing oil near the Aladja Pier in the Caspian Sea are undergoing modernization.

Joint Block-11, 12

The PSA contract was signed in 2002 by German Wintershall participants (34 percent), Maersk Oil (36 percent) and Mittal Enerji (30 percent).

The contracted area of 5,631.3 square kilometers is located in the northwestern part of the South Caspian Basin. The license was provided for 25 years with a five-year exploration period.

Project Status

The operations were ceased due to lack of significant hydrocarbon resources.

The U.S. Western Geco held 2D seismic work over 5,070 kilometers in 2003. A preliminary assessment of resources was conducted. An oil model of the block also was formed. Major oil and gas traps were allocated. The target to drill the exploratory well was a perspective Garadashlyk structure.

Block 3

The PSA contract was signed in 2007. The operator is Canadian Burried Hill.

Project Status

A 3,000-kilometer 2D seismic survey has been held. The operations are related to the analysis of seismic data and development of a drilling strategy. The company aims at long-term relations with Turkmenistan.

Block 23

The PSA contract was signed in July 2009. The operator is the German RWE Dea AG. In accordance with the agreement, the license envisages exploration for six years.

The resource estimates are unknown. By revealing hydrocarbon reserves, a license for their commercial production for 25 years will be given. Total expenditure during the initial period of the study for four years is estimated at $60 to $80 million.

Project Status

Documents to study baseline and impact assessment on the environment are being prepared. It will be given before the 3D seismic survey is conducted. It may beging in 2011. After receiving, processing and interpretation of seismic data, it is planned to drill an exploratory well by 2013.

Block 21

The PSA contract was signed in September 2009. The operator of the project is Russian ITERA. According to the preliminary estimations, the license block has recoverable oil reserves - 219 million tons, associated gas - 92 billion cubic meters. It is planned that the maximum level of oil production on the block will hit 11 million tons, gas - 4.5 billion cubic meters per year. The cost of the whole project is estimated to $6 billion.

Project Status

The company announced the international tender to conduct seismic research in 2011. The possibility of Zarubezhneft (Russia) company's joining the project is being discussed.

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