Status of offshore oil and gas contracts in Turkmenistan in Dec. 2013

Oil&Gas Materials 27 December 2013 14:14 (UTC +04:00)

Ashgabat, Turkmenistan, Dec.25

By Huseyn Hasanov - Trend:

Some 32 licensed blocks with projected reserves of 11 billion tons of oil and 5.5 trillion cubic meters of gas, excluding the contracted blocks, were put for international tender in the Turkmen part of the Caspian Sea.

The Turkmen side considers it a priority to sign the production sharing agreements with foreign companies.

The Turkmen specialists said that more than 80 percent of reserves on the Turkmen part of the Caspian Sea are in sediments located at a depth of over 3,000 metres, as well as poorly studied oil and gas zones. New perspectives are associated primarily with two major oil and gas basins - Middle Caspian and South Caspian.

Turkmenistan annually produces about 10 million tons of oil. The production is ensured by the Turkmenneft State Concern and companies from Great Britain, Malaysia and UAE operating on a PSA basis.

Petronas, Dragon Oil, Buried Hill, RWE Dea AG, Itera and Zarubezhneft have been involved in the development of the Turkmen part of the Caspian Sea.

Over $ 10 billion have been invested in the Turkmen sector of the Caspian Sea since the foreign companies began working.

According to BP's data as of 2013, oil production amounted to 222,000 barrels per day in Turkmenistan in 2012 compared to 217,000 in 2011. The total oil production was 11 million tons in Turkmenistan in 2012, which is 2.5 percent more than in 2011. The country's share in the global oil production was 0.3 percent in 2012.

According to BP's estimations, oil consumption increased by 3.3 percent - up to 100,000 barrels per day in Turkmenistan in 2012. BP's estimations on proven oil reserves in Turkmenistan in 2012 remained unchanged - at 0.1 billion tons (0.6 billion barrels) as in the previous year.

Block 1

The PSA contract was signed in 1996. The operator is the Petronas Charigali (Malaysia).

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

Project Status

Industrial production and exports of oil began in May 2006. The oil transportation route passes through Azerbaijan. Petronas produced about one million tons of oil in 2012.

In July 2011 the company expressed readiness to commercially extract natural gas. With this aim, a gas processing plant and a gas terminal were commissioned offshore. The capacity of the first stage of the complex is 5 billion cubic meters of natural gas and the projected capacity is 10 billion cubic meters.

Two unrealized projects: Caspian gas pipeline along the Caspian coast to Russia through Kazakhstan that will fix the traditionally strong positions of Gazprom JSC in the region, and the Trans-Caspian gas pipeline promoted by the European Union (as a part of Nabucco) through the bottom of the Caspian Sea, can hope for this volume.

The company has drilled about 30 exploration, appraisal and production wells in the contract area since the implementation of the project. All of them showed significant inflows of hydrocarbons.

Cheleken block

The PSA contract was signed in 1999. The operator is Dragon Oil (UAE-Great Britain).
The company's shares are listed on the London and Dublin stock exchanges (stock ticker symbol: DGO). The controlling package of shares in the company is owned by Emirates National Oil Company (ENOC).

The company carries out its main activity in the eastern sector of the South Caspian Basin, in contract territory. The total area of the contract territory is about 950 square kilometers. It includes the deposits of Jeitun, Jigalybek and Chelekenyangummez.

The proven and explored reserves of oil and condensate in the contract territory of Turkmenistan hit 677 million barrels.

Contingent oil and condensate reserves account for 59 million barrels. Gas reserves are 1.5 trillion cubic feet. Prospective gas resources amount to 1.4 trillion cubic feet.

Project Status

Since 2000 Dragon Oil has invested $ 2.8 billion in the Turkmen project. The company intends to raise more than $1 billion till 2015. According to the plans, on average, 100,000 barrels of oil and condensate per day will be produced.

Over the first half of 2013 the daily production at Cheleken rose to 73,600 barrels of oil, providing a 15-percent increase compared to the same period of 2012. In 2000, the daily production of oil at the field was 7,000 barrels.

The total oil storage capacity created by the company, constitute 300,000 barrels (40,000 tons). A new tank farm is being built, and its storage capacity will be brought up to 1.5 million barrels (200,000 tons).

In 2005 the company reached a one million point of oil production, the raw materials are sold through Azerbaijan on the basis of the contract, which expires on Dec. 31, 2014. In the first three quarters of 2013, the company sold 3.2 million barrels of oil compared to 2.8 million barrels sold in the same period last year.

Block 3

The PSA contract was signed in 2007.

The operator is Canadian Burried Hill.

Project status

A 3000-kilometre 2D seismic survey has been held. The current operations are related to the analysis of seismic data and development of a drilling strategy. The company aims at long-term relations with Turkmenistan.The information about this project is rather scanty.

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. With discovery of hydrocarbon reserves, a license for their commercial production for 25 years will be given. Total expenditures during the initial period of the study for four years are estimated at $60 to $80 million.

Project Status

In 2013 RWE Dea summed up the results of an approximate 400 square kilometer 3D seismic survey, conducted in this area for the first time. At present, this data is being interpreted. Plans were to drill an exploration well by 2013. Some 17 prospective objects and structures were discovered. In November 2013 RWE announced that the exploratory drilling at the first object will carried out from the shore in 2014-2015.

Block 21

The PSA contract was signed in 2009. The operator of the project is Russian Itera. In August 2011, the function of the operator passed to the Russian Zarubezhneft company (having a 51 per cent stake). But in 2013 Zarubezhneft abandoned the project, not joining it officially. The efforts to agree upon the corresponding documents with Turkmenistan had no result.

Project status

According to results of processing of the 2D/3D seismic data, obtained after the explorations conducted in 2012-2013, the estimated recoverable reserves total 800 billion cubic meters of natural gas and 95.5 million tons of liquid hydrocarbons.

The company said the first exploratory well at Turkmenistan's offshore area is planned to be drilled in 2014, the depth of the sea at the site is seven meters. Drilling to a depth of seven kilometers is forecasted. Total capital investments in the company's project are valued at $6 billion.

Two structures are marked out at the block. They are the West Erdekli and South Erdekli. The company says the explorations convinced them of high availability of studied hydrocarbons structures and related them to a unique category.

Itera previously reported that it does not rule out participation in the development of the Blocks 21 and 22 within the Zarit joint venture. Rosneft can act as a co-founder. But there is no information on this.

Translated by N.H., E.A., L.Z., M.L.

Edited by C.N.