C.I.S. JOINT VENTURES SHOW PROGRESS

Upstream joint ventures in the Commonwealth of Independent States are booking changes, and the steady stream of new exploration and development ventures continues. The five company group studying development of reserves off Sakhalin Island has delivered a feasibility study to the Russian government, and a Saudi Arabian company has purchased a Russian company with interests in oil and gas acreage on Sakhalin Island. Meantime, Global Natural Resources Inc., Houston, is moving ahead with its joint

Jan. 12, 1993

6 min read

Upstream joint ventures in the Commonwealth of Independent States are booking changes, and the steady stream of new exploration and development ventures continues.

The five company group studying development of reserves off Sakhalin Island has delivered a feasibility study to the Russian government, and a Saudi Arabian company has purchased a Russian company with interests in oil and gas acreage on Sakhalin Island.

Meantime, Global Natural Resources Inc., Houston, is moving ahead with its joint venture in the former Soviet Union while waiting on export tax relief.

Among the latest upstream activity:

Equity Oil Co., Salt Lake City, through its 80% owned Symskaya Exploration Co. Inc., signed production sharing contract covering 1.1 million acres in Russia.
Inuvialuit Petroleum Corp. (IPC), Calgary, has a joint study agreement with the Russian agency responsible for oil and gas exploration in eastern Siberia.
Russia's Evikhon joint stock company won a license to explore in the Nefteyugansk district of Tyumen province.
Turkey and Kazakhstan agreed to jointly explore for and develop reserves in Kazakhstan.
Wavetech Geophysical Inc., Denver, said the administration of Tomsk oblast and the Tomskneftegazgeologia production association have extended the Tomsk bidding round to Mar. 30 from Feb. 8 (OGJ, Sept. 7, 1992, p. 35).

Deadline for registration is Feb. 28.

In addition, Russia Radian Corp., Austin, agreed with Vniizarubezhgeologia (VZG), Moscow, to apply U.S. environmental technology in Russia. The agreement is aimed at helping companies that are seeking ventures there to assess environmental issues and comply with Russian environmental requirements.

Radian and VZG plan to work together on environmental studies for targeted industries, health risk assessment studies, and computer software development for environmental information management in the C.I.S. and eastern Europe.

SAKHALIN ISLAND

The group studying development of Piltun-Astokhskoye and Lunskoye oil and gas fields off Sakhalin Island in the Russian far east delivered copies of the 6,075 page feasibility study to Moscow Dec. 31.

The project included a comprehensive study of technical, commercial, and financial aspects of developing the two fields and drilling two appraisal wells.

Group members are Marathon Oil Co., McDermott International Inc., Mitsui & Co. Ltd., Shell Development Sakhalin BV, and Mitsubishi Corp. Russian partners are Sakhalinmorneftegas and members of the Sakhalin administration.

At the peak level of activity more than 500 persons, including 300 Russians, were participating in preparing the study.

The group was awarded the feasibility study late last March.

Mitsubishi joined the group early in December, agreeing to acquire from Mitsui & Co. Ltd. a 10% interest. Mitsui will retain a 20% interest. Other interests are unchanged with Marathon holding 30% and McDermott and Shell 20% each.

It is the first large internationally tendered oil and gas development in the Russian Federation. A State Expertise Commission has been assembled to evaluate the study. Results are expected in March.

Meantime, Saudi Arabia's Nimir Petroleum Co. purchased the Russian firm Petrosakh Ltd., including its interest in the Petrosakh joint venture, which holds oil and gas concessions on Sakhalin Island.

Middle East Economic Survey (MEES) reported Petrosakh was redeveloping production facilities in Okruzhnoye field in the Pogranichini basin on the island off eastern Russia. Further development and exploration are planned.

MEES said the joint venture is building a 4,000 b/d refinery in the concession area.

TATEX VENTURE

Under a protocol signed last month, Global's joint venture with the Tatneft oil production association assumed operating responsibility for Onbysk field in Tatarstan effective Jan. 1.

The Tatex joint venture, owned 50% by Global, was suspended while the company awaited clarification of the Russian hydrocarbon export tax. Global expects to receive its exemption but meantime has modified the capital program to compensate for the tax so the joint venture can start making progress.

The 1993 capital program calls for Tatex to drill as many as 25 wells, complete 25 wells drilled by Tatneft in 1992, stimulate as many as 50 wells, and conduct 50 completions.

Global said it also plans to start a program of increasing production by lowering the level at which downhole pumps are set.

SYMSKAYA PSC

Symskaya Exploration, held by Equity and Coastline Exploration Inc., Houston, signed a production sharing agreement with Yeniseyneftegasgeologia and Yeniseygeophysica, collectively referred to as ENI, granting Symskaya the exclusive right to explore, develop, and produce hydrocarbons in the Yeniseysk district of the Krasnoyarsk Krai in Russia (OGJ, May 25, 1992, p. 20).

The contract has a primary term of 25 years.

Contract terms call for Symskaya to provide funding for all exploration and development and recover the costs from 80% of hydrocarbon production after payment of an 8% royalty. The remaining share of production, net of royalty, will be shared by Symskaya and ENI based on the rate of production.

Equity said minimum spending under the contract is $12 million during the first 5 years, with at least $1 million to be spent during the first year.

The contract will go into effect after a license is issued. Symskaya has started the application process.

Symskaya also is negotiating a contract with ENI to drill the first wildcat in the program. Equity said a Russian rig, which will be augmented with western equipment, is on location in the contract area on a structure that seismic data show to be 35 miles long and 6 miles wide.

Drilling is not to begin until a license is issued.

OTHER UPSTREAM DEALS

In a deal that could lead to a joint venture agreement, IPC and Chukotneftegasgeologia have a joint study agreement covering an area in the Chukotka region.

The two will assess the technical and economic feasibility of producing small onshore oil fields in the Anadyr and Kahtyrka basins, aimed at yielding exports for western markets.

Crude from the two basins has a high wax content, but it is low in sulfur and the fields are close to the Pacific Coast.

IPC said depending on results of the study, it could enter a production agreement with Chukotneftegasgeologia in the next 2-5 years.

In other action, Russia's Evikhon joint stock company has been granted a 25 year license to explore for and develop oil in three fields in the Nefteyugansk district of the Khanty-Mansi National Area in the Tyumen region.

Evikhon expects to produce nearly 7,400 b/d from Zapadno Salymskoye (West Salym), Verkhne-Salymskoe (Upper Salym), and Vadelypskoe (Vadelyp) fields.

Total reserves of the three fields are pegged at near 730 million bbl.

Meantime, Turkey's Turkiye Petrolleri AO and Kazakhstan agreed to set up a company to explore a 20,000 sq km area of Kazakhstan where reserves are estimated at 73 billion bbl.