Lukoil starts development on Uzbek block

By OGJ editors
HOUSTON, July 10 -- Lukoil Overseas has started development drilling in the Khauzak contract area of Dengizkul gas field in southwestern Uzbekistan.

Khauzak is the first field to be developed under the Kandym-Khauzak-Shady-Kungrad production-sharing agreement (PSA) signed in midyear 2004 by a group of investors including Lukoil Overseas (90%) and Uzbekneftegaz (10%) (OGJ Online, Nov. 29, 2004). The consortium's share in profit production is 50%.

Original gas in place in the contract area is estimated at 329 billion cu m (bcm). Commercial production is expected to start in fourth-quarter 2007. Peak gas production will exceed 10 bcm/year, while cumulative production could reach 207 bcm of gas, Lukoil said.

Lukoil formed Lukoil Uzbekistan Operating to oversee project management and will create a marketing company for joint sales of production.

To date, work on the block includes a 3D seismic survey, well design, construction of power lines and an access road, and preparation for the workover of three wells.

China's TUHA is the drilling contractor. The partners plan to drill 37 development wells on the Khauzak contract area.

The Kandym-Khauzak-Shady-Kungrad project involves drilling of more than 180 development wells and construction of more than 1,500 km of pipeline. Also to be built: two compressor stations, gathering points, shift camps, high-voltage power lines, a 40-km railway line, motor roads, and access roads.

The project also involves construction of an 8 bcm/year capacity gas processing plant in the Kandym area.

To date, total investment under the PSA is about $100 million.

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