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 will 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. Iran, Turkmenistan and Turkey have contracted Shell to conduct feasibility studies for the pipeline to Europe.

Offshore Exploration: Under a PSA signed in mid-1996, Petronas Carigali of Malaysia is exploring a Caspian block. Drilling began in late 1997, with Halliburton having won a $30m contract last November to provide integrated drilling services for an exploration and appraisal programme. Petronas is hoping that oil production would begin in late 1999. It has proposed a crude oil swap deal with Iran.

Ashgabat is yet to announce the final outcome of the international tender for eight offshore blocks offered in late 1997 and early 1998 - excluding three blocks disputed by Iran which were withdrawn in November 1997. A consortium involving Cairn Energy of the UK is said to have put in the best bid of an undisputed block covering the Gaplan structure, believed to be rich in hydrocarbons. Another tender for offshore blocks was to be announced by Ashgabat in the second half of 1998.