KAZAKHSTAN - Onshore Exploration

Extensive onshore exploration efforts by foreign companies were begun in late 1992 by Elf Aquitaine. It was followed in late 1993 by Chevron in Tengiz field, which is now the biggest oil producer in Kazakhstan (see Part 2).

Elf was among the first Western companies to be involved in Kazakhstan. It collected seismic data in the Volga and Temir fields, in the western region of Aktyubinsk. Its work began in July 1992 under a PSA. But talks with the government dragged on, as in the case of other E&P deals involving foreign firms, and Elf withdrew in February 1997 after having encountered results of minor importance. Later the Temir block was acquired by Veba Oel of Germany.

In October 1997, Shell bought 60% into this PSA and became the operator, with Veba retaining 40%. Shell was committed to drill two exploration wells and two appraisal wells.

Temir Block B was acquired in October 1997 by the Turkish state oil company TPAO under a $750m PSA. This is in the Aktyubinsk region near the Caspian Sea and close to the large oilfield of Zhanazhol, with the area said to have 330m barrels of oil. Amoco joined TPAO in early 1998 with 50%. The partners were to pay the government a $3m signature bonus and another $2m towards the cost of building the new Kazakh capital of Astana.

TPAO has six other blocks in Kazakhstan. It holds 49% in Kazakturkmunay Joint Petroleum Corp. It partners there are three KazakhOil units, the former Kazakh geology ministry's Kazzarubejgeologia (26%) and Munaygaz (25%). Kazakturkmunay, set up under PSA signed on Jan. 9, 1993 and in operation since 1994, has six onshore concessions in the Pre-Caspian Basin (which includes Tengiz and Karachaganak) in the Uralsk, Aktau, Atyrau and Aktyubinsk regions in the west.

In the other five blocks, Kazakturkmunay is producing about 1,200 b/d of oil from the following fields which it has developed: Yelemez in Aktau, on stream since March 1995, producing 28 deg. API oil from the Nisanov-98 and Nisanov-79 wells, and the D-Saztube-2 well which began production in Dec. 1996, with the oil taken by trucks to Chevron's Tenghiz production/export system, but Kazakturkmunay is building its own pipeline to the country's Russian export system which eventually will link up with the CPC pipeline to Novorossiysk on the Black Sea; Laktibay in Aktyubinsk, on stream since Aug. 1, 1995, producing 40 deg. API oil marketed on the well site; Toberal in Atyrau region, with two wells on stream since early 1996. Over 10 smaller fields, with some producing, include Bekbolat and Tobearal.

Mobil is operator of the Tulpar field, which is to be re-explored and is near the Karachaganak field, in a block of 17,759 sq km. The field is in the Pre- Caspian layer and Mobil began drilling the first well in early 1998. But already since mid-1997 the field has proved a disappointment and the area was initially believed to contain reserves comparable with those of Karachaganak. Mobil, whose PSA was signed in 1995, leads a consortium for this with a 25% stake. The group includes Shell (12.5%), a Japex-Sumitomo partnership (12.5%) and KazakhOil (50%). Shell and the Japanese partners farmed into Mobil's PSA in August 1996.

Union Texas holds 37.5% in and operates two blocks covering 16,000 sq km in the Atyrau region. It acquired the stake in early May 1997 from a partnership of Partex and state-owned Oman Oil Co. (OOC). The JV, in which the 50% partner is KazakhOil, was to spend $20m in exploration over a three-year period. Exploration was to include two horizontal wells to test the Dunye field in 1998.

Union Texas also acquired from KazakhOil preferential rights to two offshore blocks in the Kazakh sector of the northern Caspian.

Repsol of Spain and Enterprise Oil of the UK in July 1997 signed a PSA with KazakhOil to explore and develop the Baiganinsk block. Repsol is the operator with a 30% equity and Enterprise holds 20%. KazakhOil holds the remaining 50%. Repsol began initial exploration work in September 1997.

Repsol and Enterprise were to invest $25m over a period of six years. Investment in field development and related facilities could reach $1 bn.

Nimir Petroleum, a private Saudi company controlled by the Bin Mahfouz family, in June 1997 signed a PSA for the North Buzachi field. It was to drill three wells and start test production by end-1997. Development options will be assessed during a three-year pilot programme, with Nimir likely to use steam injection or horizontal drilling. The maximum production target is 80,000 b/d.