TURKMENISTAN - The Bridas JVs.

Bridas Corp. of Argentina was the first foreign company to produce oil from two joint ventures: a JV with TurkmenGeologia having developed the Yashlar/Lolotan areas of the Amu Darya basin in eastern Turkmenistan, where the Argentinian company has invested over $200m and found the huge Yashlar gas field; and a JV with TurkmenNeft having developed the Keimir, Ekpatlaukh, Chikishlyar and Kotur Tepe oilfields. Bridas has invested another $220m in this venture.

The latter JV, for the Keimir block, is located on the south-western coast of the Caspian near the border with Iran, and the fields are rich in gas as well. Its original partner was the state-owned BalkanNefteKhimProm, which is not part of TurkmenNeft. The JV's production in mid-1995 averaged between 16,000-22,000 b/d of light and sweet oil, with the export crude called Okarem. Bridas then said the Keimir fields' production capacity could be boosted to 120,000 b/d within three to four years.

However, there is no production now as Bridas and the government have been locked in a dispute since November 1995, when Ashgabat suspended the company's right to export its output. After two rounds of inconclusive negotiations with the government, the Argentinian company resorted to arbitration at the International Chamber of Commerce in Paris. In January 1997, the Paris chamber ordered Ashgabat to lift its ban. President Niyazov ignored the order. He was angered by Bridas' action and swore he would never do business with a company which humiliated his country.

The government continued to accuse Bridas of having taken advantage of its lack of experience and exacted "unfair terms" in its PSAs. Bridas said the government was responsible for its signatures, insisting that any breach of the agreements must be compensated for.

Bridas is owned by the influential Bulgheroni family of Argentina. The company took the Keimir block in Turkmenistan's first tender in 1991. In the second tender, in 1992, it took the Yashlar/Lolotan block in the east. In Keimir the company's chairman, Dr. Carlos Bulgheroni, has built one of the most lavish compounds in the FSU, with green lawns and a swimming pool. His waiters have fed guests there with caviar and Argentinian wine.

In March 1995, Bridas signed an initial accord with LUKoil and the Russian company's Italian partner Agip to develop the Keimir fields on a large scale and to secure an export outlet for 120,000 b/d. This was to be using Russia's pipelines and a shipping venture across the northern Caspian.

When the government suspended Bridas' export licence, in November 1995, it said had made a mistake in signing the deals in 1991/92 and that the E&P terms granted to the company were much too favourable. The then oil and gas minister Amangeldy Esenov explained in late 1995: "When the contract (PSA) was signed, it was not profitable for both sides... If I had been able to foresee the future three years ago, I would have signed a different contract, a civilised contract that would be profitable for both". He said it was to persuade Bulgheroni to help correct Ashgabat's mistake that Esenov blocked Bridas' exports. Bulgheroni said in early 1996: "If you don't have the rule of law, how can we work here?"

Bridas was planning to develop Yashlar, a super-giant which it found in 1995, which contains 27 TCF of gas and 165m barrels of condensates in the Amu Darya basin. Its development could cost $1.5 bn. Bridas has promoted a pipeline, to cost another $1.5 bn, for the gas to be pumped to Pakistan through Afghanistan. This rivalled Unocal's project to build two parallel pipelines, for oil and gas, to Pakistan via Afghanistan (see Part 3).

The conflict with Bridas escalated in early 1998, a TurkmenNeft took over the Kotur Tepe oilfield which was part of the Keimir JV, under a PSA given exclusively to the state company. In mid-1998, TurkmenNeft signed an agreement with Mobil and Monument (now Lasmo) for them to provide the state firm with technical help to rehabilitate the developed but mature reservoirs of Kotur Tepe and Barsa-Gelmes. But ExxonMobil abandoned its operations and left Turkmenistan earlier this year (see OMT).

Bridas Corp. is registered in the Virgin Islands. In Argentina, where it grew from being a drilling contractor through favoured deals with the former Argentine state oil company YPF, it produces gas and oil. After the privatisation of Argentina's oil and gas sectors, Bridas moved into international business and Turkmenistan was its main investment. In 1992, Dr. Bulgheroni became close to President Niyazov and other Turkmen leaders. In promoting the gas pipeline to Pakistan, he braved missiles and murderous Afghan gangs. He trekked across the mountains of Afghanistan to sell his plan to local warlords. Later he threatened to sue both Unocal and the Turkmen government for promoting a rival gas pipeline.