ExxonMobil Corp. has taken a leading position among players in the Caspian Sea region.
The merger of the two giant oil companies has resulted in a company with the biggest position in exploration acreage in three key Caspian countries, says Wood Mackenzie Consultants Ltd., Edinburgh. The analyst attributes this ascent to the strategic fit of the companies and few areas of overlap in Azerbaijan, Kazakhstan, and Turkmenistan.
"ExxonMobil has been propelled into the league of top players in Kazakhstan, with a balanced portfolio of exploration, production, and pipeline interests. This resulted from Mobil's exceptionally strong position in Kazakhstan's key projects, namely Tengizchevroil, Offshore Kazakhstan International Operating Co., and the Caspian Pipeline Consortium oil export pipeline [see table].
"Kazakhstan is traditionally an area where Exxon has had limited success-where its only previous involvement was through a farm-in to the Mertvyi Kultuk exploration area, at the time operated by Oryx [Energy Co.]. Despite ExxonMobil's strong position, it is operator of only two out of 11 active projects," said the analyst.
Acreage position
In the Caspian region, ExxonMobil ranks third behind Chevron Corp. and Russia's Lukoil in terms of remaining proven oil reserves.
Mobil brings to the deal net reserves of 2.4 billion boe from its 25% interest in Tengizchevroil in Kazakhstan and 108 million bbl of oil from its 40% interest in the Nebit Dag project in Turkmenistan (OGJ, May 4, 1998, p. 62). Exxon's 8% interest in the Azeri Chirag Gunesh* (ACG) project contributes reserves of 364 million bbl of oil, Wood Mackenzie notes.
ExxonMobil has slipped in terms of net acreage, because of the relinquishment of Tulpar and Mertvyi Kultuk, large contract areas in Kazakhstan, but overall retains a strong position with interests in seven exploration projects in the Caspian region, excluding "ellipseAzeri PSCs [production-sharing contracts] signed but not yet ratified and other contracts still under negotiations," said the analyst.
Growth area
In the future, a potential area of growth for ExxonMobil could come in the form of major gas projects. "Exxon's interests in Turkmenistan lie in the gas-prone areas in the East, where it is negotiating a PSC linked to a possible gas export pipeline project to China," said Wood Mackenzie. "It seems reasonable to assume that Mobil's established base in the country could facilitate progress in this area."
"The combination of a united ExxonMobil has created a new leading player in the region, whose financial muscle should allow investments to be made in the critical projects," said the analyst. "The future focus of the company could be directed at exploring ways of realizing the value of gas assets, expanding its production position, particularly in Azerbaijan, and perhaps increasing its operatorship and reviewing its participation in the Turkmen oil projects."