FIRMS STILL CHASING C.I.S. DEALS; MORE FIELDS TO OPEN

Foreign companies' pursuit of oil and gas ventures in the Commonwealth of Independent States continues unabated.

Total has signed its third cooperation agreement with Russian partners, this one with Komineft to act as operator in development of Khariaga oil field in the Timan Pechora basin near the Arctic Circle west of the Urals.

Amoco Eurasia Petroleum Co. officials have made progress in negotiations with the Azerbaijan republic on contracts to develop the Caspian Sea's giant Azeri oil field. Meanwhile, the Turkmenistan government has outlined plans to open more of the former Soviet republic's oil and gas fields to bids for joint development.

TOTAL DEAL

Total signed a production sharing contract with Komineft to develop two of seven productive zones in Khariaga field, Nenets Autonomous Region.

Potential oil reserves covered by the contract are estimated at 250 million bbl.

Development is not likely to begin for 2-1/2 years, the time expected for the approval process by Russian Federation authorities.

Total's ultimate outlays are projected at $1 billion. An initial 3 year phase will require spending of $400 million. Total expects production to plateau at 35,000 b/d.

Moscow's Itar-Tass news agency said development of Khariaga has been stymied by the oil's high sulfur contends After a certain production level is achieved, Komineft will get 75% of production, Total the remainder, Tass said.

Total's first Russian cooperation agreement, covering work in Romashkino oil field, was signed in September 1991 and is being implemented. Its second, signed in December 1991 with UNGG also covering Timan Pechora, awaits Russian Federation approval.

AZERI DEAL SLOW GOING

A delegation headed by Amoco Eurasia Pres. Robert Blanton visited Baku in May to work on the Azeri deal, Moscow's Izvestia newspaper reported. The newspaper said good progress was made on technical aspects of proposed contracts, but much less agreement was reached regarding commercial problems such as Amoco's rate of return on investment.

Azerbaijan is placing great hopes in Amoco to develop Azeri field and help relieve the republic's severe economic problems, Izvestia declared. But it noted that lack of experience by the Azerbaijan government in negotiating contracts as large and long term as those involved in the Azeri project is a big factor in slowing progress to reach an agreement on commercial problems.

Izvestia said Amoco Eurasia and Azerbaijani officials are optimistic and expressed confidence a mutually profitable contract covering 30-40 years would be ready for signing soon. It will mark a new stage in Azerbaijani-American economic relations, the newspaper declared.

In late April an Amoco chartered aircraft delivered 37 tons of medical supplies worth more than $2.5 million to Baku as humanitarian aid.

As with the Chevron-Kazakhstan negotiations on development of supergiant Tengiz oil field on the Caspian's northeast coast, reports had circulated that the Azeri deal had run into major difficulties. It has been almost a year since Amoco Eurasia was chosen as the project's main operator.

CASPIAN PRODUCTION

Indications are Azeri field is capable of producing as much as 275,000 b/d of oil equivalent. That could make it the Caspian's all time biggest producer, surpassing giant but now largely depleted Neftianye Kamni (Oil Rocks) and 28th of April fields.

Total Caspian oil production has dropped to less than 200,000 b/d with little prospect for improvement until Azeri goes on stream.

All of Azerbaijan's big offshore oil fields lie on the Apsheron Sill, a geological feature that extends eastward beneath the Caspian from Azerbaijan to Turkmenistan.

28th of April field, west of Azeri, now produces most of Azerbaijan's oil. Flow from 28th of April exceeds total production from all of the republic's fields, onshore and offshore.

TURKMENISTAN PLANS

About 24 fields onshore and offshore in Turkmenistan's South Caspian basin will be made available in the republic's latest offering. They hold remaining reserves pegged at more than 1.3 billion bbl of oil and 10.5 tcf of gas.

Wavetech Geophysical Inc., Denver, which is assisting with the offering, said two meetings will be held to present geological and engineering overviews of the fields and discuss approaches in structuring the ventures.

The first meeting will be June 16 in London, the second July 1 in Houston.

In mid-July Turkmen officials will be in Denver to discuss contract terms with companies. Wavetech said a number of detailed geological and engineering studies of the fields will be complete by then so companies will have a chance to review the nature and depth of technical detail. A model contract also will be available.

Companies interested in any of the fields will have an opportunity to visit field facilities in Turkmenistan in late September.

OTHER TURKMEN OFFERINGS

Wavetech said Turkmenistan plans to offer a new group of fields every 2-3 months in the coming year. Within a few months after data are released there will be a deadline for submitting bids, then the bids will be evaluated. Awards will be made within about 30 days of each deadline.

The first competitive bidding for oil and gas acreage in Turkmenistan was held last year (OGJ, June 3, 1991, p. 108) and covered exploration blocks in the Yashlar, Badkhyz, and Tedzhen sectors of the Amu-Daria basin, as well as the West Turkmen sector of the South Caspian basin covered by the current offering. There were no bidders in the first offering.

Wavetech's Duke Mann said there is much more data available now on the South Caspian basin.

With that new information reserve estimates have been increased, and the area is much more prospective, he said.

Copyright 1992 Oil & Gas Journal. All Rights Reserved.