Investments and innovation in unconventional hydrocarbons

Investments and innovation in unconventional hydrocarbons

Azerbaijan , Baku, 27 July / Trend /

Even with abundant conventional hydrocarbon resources, CIS oil and gas producers still show little interest in unconventional hydrocarbons, according to the report Coalbed methane from Ernst & Young. This fact will constrain investments in unconventional hydrocarbons for many years ahead.

Prioritizing coalbed methane prospects in the CIS is the key output of this work. Ernst & Young considered fields of 100 sq. km so they could perform a comparative analysis. The larger a field is, the more interesting the project is to potential investors.

"As characteristics of the discussed parameters often demonstrated excessive spreads, a decision was made to independently interpret the available information," said Andrey Kobzev, Ernst & Young Director, Moscow Oil and Gas Center. "Obviously, reliance only on public sources enables just a very general evaluation of specific acreages in terms of potential for developing coalbed methane."

"In such terms, Kemerovo's total coal resources make the region an unquestioned leader," said Victor Borodin, Ernst & Young Tax Partner. "However, we decided to summarize a number of parameters in one table, such as recoverable reserves per well, discounted production cost (including capex), number of wells in a field and each well's calculated absolute open flow and a field's overall guaranteed production rate (plateau production). As mentioned above, it is now difficult to forecast the output of pilot coalbed methane projects. Therefore, we developed three potential scenarios, including low productivity, expected productivity and high potential."

By comparing Kazakhstan's, Ukraine's and Russia's figures, Ernst & Young concluded that coalbed methane projects are very attractive in the Kuznetsk Basin.

Ernst & Young's estimates are derived from preliminary data and cannot form the only basis for a decision. The company ranked countries based on aggregate results and concluded that projects have strong potential in Russia, while Ukraine and Kazakhstan are about equally competitive.

"But the technical component is often not the main consideration in the choice of a country for investing. Potential investors would also evaluate debt burden, costs to overcome administrative barriers and other factors inherent in major projects", said Alexey Kondrashov, Ernst & Young Partner, Moscow Oil and Gas Center and Global Oil and Gas Tax Leader.

"Estimating and forecasting permeability of reservoir rocks at planned development sites is the most relevant issue in the CIS," noted Andrey Kobzev. "Of course, companies could ignore that stage and immediately proceed with implementation, but they will face this issue again at a later stage when testing different technologies and well designs."

Such projects will drive technological innovation and investments in logistics and infrastructure. They will also boost economic growth in the regions which have coal reserves.

"We estimate potential investments in such projects in the CIS at hundreds of millions of US dollars," commented Victor Borodin. "Addressing the issues described above will help accelerate investments. Hopefully, we will see at the 'round table' not only company executives interested in coalbed methane projects, but also regulators. It is time to discuss burning issues. If the dialogue takes place, we may see an independent sector emerge in three to five years that will rely on innovative technology and management solutions."

About Ernst & Young

Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 141,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

Ernst & Young expands its services and resources in accordance with clients' needs throughout the CIS. 3,500 professionals work at 18 offices including Moscow, St. Petersburg, Baku, Almaty, Astana, Kyiv, Tbilisi and other locations.

For more information about our organization, please visit

58 more coronavirus patients die in Moscow in past day — crisis center
58 more coronavirus patients die in Moscow in past day — crisis center
Some 41,500 National Guard officers on duty in US amid protests
Some 41,500 National Guard officers on duty in US amid protests
WHO recommends wider use of face masks to curb COVID-19
WHO recommends wider use of face masks to curb COVID-19
Loading Bars
58 more coronavirus patients die in Moscow in past day — crisis center
Some 41,500 National Guard officers on duty in US amid protests
WHO recommends wider use of face masks to curb COVID-19
Facebook says it found no foreign interference targeting U.S. protests
Trudeau takes a knee at anti-racism protest on Parliament Hill
Trump orders 9,500 US troops to leave Germany
Finland's finance minister steps down over training payments
5.2-magnitude quake jolts eastern Turkey
EU countries agree on coordinated, non-discriminatory lifting of travel ban
Turkey: Daily coronavirus recoveries up with over 1,600
UK COVID-19 deaths top 40,000 as another 357 patients die
ADB eyeing agreement signing on road reconstruction in Kazakhstan
Azerbaijan discloses number of coronavirus tests
Italy's COVID-19 death toll up 85 to 33,774
Tourists from Israel may be among first visitors to Georgia
Agent bank of two more liquidated banks chosen in Azerbaijan
Azerbaijan plans to increase Virginia tobacco production
Central Bank of Iran seeks to unfreeze foreign currency sources abroad
Azerbaijan Wine Producers & Exporters Association eyes new markets for export
Kazakhstan's Shymkent to oversee implementation of various agro-industrial projects
Azerbaijan’s Technol plant talks about production plans
Georgia begins construction of Namakhvani HPP cascade
Azerbaijan’s Elektrogas company testing latest models of heating equipment
Industrial parks to appear in Kazakhstan's Almaty
Agrarian Credit & Development Agency talks subsidies issued to Azerbaijani farmers
Turkmenistan develops packers to increase oil field productivity
Construction of Georgian Kutaisi bypass road nearing completion
Embassy: Romania, Georgia enjoy excellent relations
More than half of financial irregularities in Azerbaijan fall on accounting and reporting
Wind power plant construction underway in Kazakhstan's Zhambyl
Azerbaijan extends project on supporting women's entrepreneurship
Polish company installing new systems at Kutaisi int'l airport in Georgia
Azerbaijan eyes exporting textile products to Russia, Arab countries
One more professional participant registered in Azerbaijan's insurance market
Uzbek United Processing Center to improve e-business environment in country
Georgia, Poland discuss resumption of air traffic
Federal Ministry: Germany seeks to further expand its relations with Azerbaijan
Azerbaijani association talks planned volume of hazelnut export
Users of fixed internet doubles in Georgia
Global Environment Facility supports environmental project of Uzbekistan
Azerbaijan detects 338 new COVID-19 cases
WeWork Global to invest $100 million in India business
Azerbaijani Tax Service comments on changes to Tax Code
TAP project’s schedule remains unchanged
Canada gains surprise 289,600 jobs in May, jobless rate hits record
Georgia to open skies to international flights
Turkmenistans Turkmenstandartlary extends tender to buy lab equipment
144 Azerbaijani citizens return from Ankara to Baku via Azerbaijan Airlines' flight (PHOTO)
Turkmenistan's Kaakhkinsky district expands areas for vegetable, fruit crops
Solar plant capacity to be increased in Kazakhstan's Karaganda
Kazakh FlyArystan suspends flights to regional center of West Kazakhstan
Uzbekistan sells state shares in wine cluster of Samarkand region
Georgia discloses amount of funds spent on quarantine space
Uzbekistan may lock co-op with Israeli geotechnical engineering company
Review of microfinance organizations' ratings in Georgia
Azerbaijan’s AccessBank ended 2019 with profit
Germany strengthens cooperation with Uzbekistan
Volume of fuel oil shipment via Turkish ports from Jan. through Apr. 2020 announced
Azerbaijani AccessBank’s liabilities decrease
Uzbekistan to upgrade infrastructure of Fergana region's district
Volume of Turkish mining industry products export declines
Azerbaijan's ministry talks postal services work during quarantine
No progress in latest round of EU-Brexit talks
LVMH backs down on renegotiating Tiffany deal
Azerbaijani MFA: Armenia may face severe consequences of its policy
Azerbaijani Energy Minister to attend OPEC+ Ministerial Meeting
Turnover of electric power surges in Azerbaijan
Azerbaijan's textile factory discloses knitwear production capabilities
Spain to open to foreign tourism from July 1
Cargo shipment volume from Ukraine via Turkish ports announced
Google Chrome's share in Azerbaijan's browser market grows
Nine insurance companies’ claims shrink in Azerbaijan
Turkmenistan, Russia discuss co-op within int'l organizations
Turkmenistan assesses environment, following 'day without cars'
France's import of grain, legumes from Turkey down
Coal railway cargo transportation up in Kazakhstan
Kazakhstan's AIFC to bring more revenue to state budget by project co-funding
Jewelry export from Turkey to foreign markets downgrades
South Korean Sejin G&E to bring gas-based power production to Uzbekistan
Turkmenistan's Health Ministry to buy medicines via tender
Uzbek-Chinese JV opens tender for procurement of mobile lifting machinery
British luxury carmaker Bentley to cut quarter of workforce
Presidents of Georgia, Albania may open direct flights
Canada interested in cooperation with Uzbekistan
WoodMac expects significant increase in 2021 oil demand
Azerbaijani parliament approves bill on 2019 budget fulfillment in first reading
Turkmenistan strives for saving Caspian Sea resources during COVID-19
Kazakhstan's KAZ Minerals ups funding for copper project in Russia
Volume of jet fuel transshipment through Turkish ports announced
Azerbaijan’s Elektrogas LLC talks manufacturing gas-fired water heaters
Azerbaijan creating its first biosphere reserve
Georgia, Germany, France discuss creating safe travel corridors
Iran restoring water level in Lake Urmia
All permits in place for new technology at Azerbaijan’s Kursangi, Garabagli fields
Israel-Georgia Chamber of Business boosting cooperation with Israeli LAHAV
Bombardier to cut 2,500 aviation jobs as COVID-19 hurts sales
Ambassador: Open market economy to help Georgia to become richer
Iran to discuss details of budget plan reform
Kulevi oil terminal holds annual inspection of all safety equipment
Assets of Azerbaijan’s AccessBank surge
All news