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TURKMENISTAN - Burren Energy.

Burren Energy of the UK is producing 17.500 b/d of crude oil from the Burun structures. It is still developing Burun, the biggest set of fields in the Nebit Dag area. When its PSA was signed in 1995, the planned investment was put at $500m. The ministry of oil and gas in 2000 said the Turkmen side was to continue to receive the same volume of crude oil, then averaging 5,000 b/d, which TurkmenNeft used to produce from Burun before the JV was formed. All oil produced over that volume is divided between TurkmenNeft and Burren Energy.

The Nebit Dag PSA includes deep reservoirs beneath the Nebit Dag and Kum Dag fields, whose shallow formation had been virtually worked out. Nebit Dag went on stream in late 1997 and now is producing 30-36[degrees] API oil. Originally the output of this and other fields was planned to reach more than 50,000 b/d before end-2000. But the fields are producing far less than that at present. It was agreed in 1995 that these oilfields' peak production after rehabilitation should reach 180,000 b/d by 2006. Independent experts have said such a target was too ambitious and may not be reached before 2010/12.

The PSA gives the partners rights to a condensate field of Kyzl Kum and the Kara Tepe gas field. It has been said Nebit Dag contains about 2 bn barrels, with a recovery factor of 25-35%. It is also said Garashsyzlyk block's reserves could be as great, or greater than, those of Nebit Dag. The government in 1995 said the two blocks could raise oil output in western Turkmenistan to 500,000 b/d by 2006/7. Again such a target has proved to be too ambitious and is not to be reached during this decade.

Apart from Petronas of Malaysia which is an offshore operator (see Gas Market Trends), the Danish firm Maersk has been operating on PSA basis in offshore Turkmenistan. Maersk has completed seismological surveys on two contract blocks which it holds in the Middle-Caspian oil and gas bearing basin.

Russian, Chinese, Ukrainian, German, Canadian companies and firms from other countries are conducting negotiations with the government of Turkmenistan on co-operation in development of hydrocarbon resources of the Caspian Sea. There is a partnership with Schlumberger on oil and gas field services in the eastern fields. Chinese companies are providing equipment and helping restore inactive wells at the fields of Koturdepe and Gumdag.

Western Geophysical (WG) of the US in August 2000 began seismic surveys over a 300 sq km section of Garashsyzlyk block's Kotur Tepe and Barsa-Gelmes oilfields, under a contract signed in October 1999. The fields' upper strata have already been explored and developed extensively. WG experts have said that new surveys might reveal more oil and gas at deeper levels.

The PSA for this section and deeper levels of the fields was held by ExxonMobil in JV with Lasmo and TurkmenNeft. ExxonMobil and Lasmo worked with TurkmenNeft and environmental authorities in the Balkan province to ensure that all local, national and international standards were met. But the fate of this became uncertain after ExxonMobil's left Turkmenistan in 2002.

Mobil had signed the PSA for this part of the Garashsyzlyk block in June 1999, before merging with Exxon. The PSA was held 52.4% by ExxonMobil, 27.6% by Lasmo (Monument Oil & Gas), and 20% by TurkmenNeft. The deal gave rights to a 4,500 sq km area. Work was to concentrate on the Barsa-Gelmes, Cheleken, Ekizak, Guichzhik, Kordekli and Kotur Tepe fields. The deal called for a six-year exploration programme, with an option for a two-year extension. In the event of a commercially viable reserves discovery, the reserves were to be developed on full scale for a 20-year production period. There was the option of extending the production period for another five years.

TurkmenNeft is developing the shallower zones of the Kotur Tepe and Barsa-Gelmes fields. Under a resolution signed in May 2000 by President Niyazov, the State Bank for Foreign Economic Activity was to give TurkmenNeft $22.664m to finance the Barsa-Gelmes project and $10m for the Kotur Tepe projects in 2000-02. TurkmenNeft was to drill horizontal and slant wells and to sink the shafts with electric drills. Four of the wells were to be drilled in 2000 and another four in 2001. These were to yield 20,000 tons of oil in 2000, 193,000 tons in 2001 and 890,000 tons by 2006.

TurkmenNeft was also to begin using new techniques in 2000 to boost the oil output at the shallow parts of the fields. It was said the under-water drive method alone would boost production by 78,000 tons in 2000 and by 119,000 tons in 2001. TurkmenNeft said in June 2000 the two projects were to be so profitable that the bank was to recoup its investment within two to four years. For these projects the state oil company chose to operate without foreign participation. The company estimated the recoverable oil reserves at these parts of the fields at 150m tons. But independent observers said its estimate was too optimistic. TurkmenNeft may eventually require help from qualified foreign companies. Under a long-term programme for the TurkmenNeft-controlled parts of two fields, a total of 160 existing wells were slated for rehabilitation to produce between 200,000-500,000 t/y.

Schlumberger is operating at oilfields in western Turkmenistan under a five-year contract with TurkmenNeft worth $36m signed in 2004. Schlumberger has worked in Turkmenistan since 1998. Schlumberger is helping the national companies increase oil production in western Turkmenistan. The contract covered operations in the Kotur Tepe, South Kamyshldzha and Koperdzhe oilfields. Schlumberger has taken part in servicing the fields' wells and provides necessary equipment.

Ashgabat's plan in 1998 was for the Turkmen companies to raise their oil output to about 100,000 b/d by 2000. This target was not reached, however, as the work of Schlumberger was hindered by government interference and TurkmenNeft failed to pay the Western company on time. But the payment situation improved in 2000, though the Turkmen oil companies failed to raise their oil production according to the government's plan.
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Publication:APS Review Oil Market Trends
Date:Sep 25, 2006
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