TURKMENISTAN - Iran Drilling Deal.

In August 1998, the National Iranian Oil Co. (NIOC) won a $25m contract to drill four oil wells in the Turkmenbashi region. A team of 64 Iranian engineers arrived there in mid-August to begin work. The drilling programme was to take 18 months.

Tehran and Ashgabat inaugurated a $200m gas pipeline in December 1997. This was part of a project to transfer Turkmen gas to Europe via Iranian territory and Turkey.

Of the offshore blocks offered, Lachin, Yelbars and Burgut were claimed by Iran. Later negotiations were held with the Tehran government on a proposed joint development of these tracts.

One rich field called Serdar, awarded to Mobil, is claimed by Azerbaijan which calls it Kyapaz. Baku had awarded this block to Rosneft and LUKoil of Russia (see background following).

Under a PSA signed in mid-1996, Petronas is exploring a Caspian block. Drilling began in late 1997, with US oilfield service company Halliburton having won a $30m contract in November that year to provide integrated drilling services for an exploration and appraisal programme. Petronas was hoping that oil production would begin in late 1999 or in early 2000. It has proposed a crude oil swap deal with Iran.

Shell is still negotiating with the authorities PSAs for a number of gas fields, including Malai (in the Amu Darya Basin), parts of Shatlyk (in the Murgab Basin), Naip (Amu Darya), Karadzhulak (Bakhardak Monocline), and Ekerem (western Turkmenistan). Shell has been talking with the Turkmen on the proposed PSAs for the past four years. The talks have included a proposed Trans-Caspian Gas Pipeline (TCGP) to pump 30 BCM/year of Turkmen gas to Turkey (16 BCM/y) and East Europe (14 BCM/y) through Azerbaijan and the Turkish territories. But the pipeline project has been delayed because of President Niyazov's attitude, although Shell is now hoping to revive it through an expanded version to include Azeri gas (see Part 3).

Turkmenistan's proven oil reserves are estimated at 1.4 bn barrels, with BP's statistical review in mid-2000 putting them at 500m barrels. Proven gas reserves estimates range from 98 TCF to 155 TCF. Another 250-300 TCF in place are said to be probable. Most increases in oil and gas reserve estimates in recent years have resulted from a reappraisal of the fields.