CONOCO EXPANDS SOVIET JOINT VENTURE PLANS

More trades are surfacing involving joint ventures in the Soviet Union. Conoco Inc. disclosed it has signed a protocol covering a possible venture to develop oil and gas reserves in the Timan-Pechora basin of Soviet northern Europe. It is the third Soviet joint venture being considered by Conoco or parent Du Pont, said Constantine S. Nicandros, Conoco president and chief executive officer. In addition, Phibro Energy Inc., Greenwich, Conn., reached an agreement with Anglo-Suisse Inc., Houston,

Oct. 15, 1990

4 min read

More trades are surfacing involving joint ventures in the Soviet Union.

Conoco Inc. disclosed it has signed a protocol covering a possible venture to develop oil and gas reserves in the Timan-Pechora basin of Soviet northern Europe. It is the third Soviet joint venture being considered by Conoco or parent Du Pont, said Constantine S. Nicandros, Conoco president and chief executive officer.

In addition, Phibro Energy Inc., Greenwich, Conn., reached an agreement with Anglo-Suisse Inc., Houston, to join the White Nights joint venture in the western Siberian basin (OGJ, Aug. 6, p. 32).

Conoco also is studying the feasibility of a joint venture with the Soviet Union's Tyumenneftegas, Tyumengeologia, and Noyabrskneftegas to develop hydrocarbons in the Tyumen, Purpa, and Noyabrsk regions in the western Siberian basin, east of the Ural mountains.

Combined, the two Conoco study areas in the western Siberian and Timan-Pechora basins have potential recoverable reserves of 3-4 billion bbl, said M.G. Pitcher, Conoco executive vice-president for worldwide exploration.

In November 1989 a group of companies that included Du Pont Services BV, which is an affiliate of Dutch Conoco, began studying an exclusive agreement with the Soviet Ministry of Oil to evaluate the giant Schtockmanskoye natural gas field in the Barents Sea.

Also involved in that study are Norsk Hydro AS of Norway and Neste Oy, Imatran Voima Oy, and Oy Wartsila AB, all of Finland.

Schtockmanskoye reserves are believed to exceed 100 tcf, Conoco reported.

CONOCO STUDY AREAS

Pitcher said the Timan-Pechora study area contains several large undeveloped oil and gas fields and substantial exploration acreage, which will become increasingly important producing areas for the Soviets.

Nicandros said Conoco in September signed a protocol to study feasibility of a joint venture there. Representing the Soviet Union were officials of the Ministry of Geology, PGO Arkhangelskgeologia, and other local Arkhangelsk authorities.

Conoco technical specialists have made several field trips in the region, and have met many times with Soviet specialists in Conoco's Houston headquarters and in Alaska.

Nicandros said the study area in western Siberia has a well established oil and gas production infrastructure. It includes Kharampur oil and gas field, Sugmut oil field, and about 30,000 sq km around those fields with "exploration potential."

Of the Soviet Union's estimated 11.7 million b/d of oil production, the western Siberian basin accounts for more than 60%.

The agreement also considers the building of gas processing plants and other facilities.

TRACK RECORD

Pitcher said Conoco's reputation for working in environmentally sensitive regions around the world helped the company win the Soviet joint venture studies.

The western Siberian and Timan-Pechora basins are tundras, many areas of which become wetlands when temperatures are warm enough to thaw frozen surfaces.

"Especially important for the Soviets is Conoco's successful operation of the northernmost operating field in the world, at Point Milne in Alaska," Pitcher said.

Nicandros, also a top Du Pont executive, said Du Pont does more than $320 million/year of business in the Soviet Union. Its activities include reciprocal sales and technology transfers of elastomers, synthetic fibers, electronic materials, and pharmaceuticals.

Du Pont has operated in the Soviet Union for more than 10 years. It has offices in Moscow, where it plans to build an office building.

WHITE NIGHTS

White Nights is a 50-50 venture with the Soviet Union's Varyeganneftegaz U.S.S.R.

It plans to drill about 550 horizontal oil and gas wells and attempt to recomplete more than 100 wells currently shut in.

Phibro, Anglo-Suisse, and Varyeganneftegaz recently completed a joint engineering feasibility study, the first step in the Soviet Union's joint venture registration process. The firms plan to complete registration in December, then begin equipment mobilization in first quarter 1991 and start field operations in the next quarter.

White Nights expects to begin producing 800 million bbl of proved reserves in mid 1991.

Under terms of the joint venture agreement, Phibro and Anglo-Suisse will export their production shares.

Phibro also disclosed it has acquired a 10% interest in Anglo-Suisse with options to increase its interest to 30% during the next year. The purchase combines Anglo Suisse's upstream foreign exploration and production with Phibro's downstream trading, marketing, and refining operations.