Monument-Mobil JV pushes Turkmen projects

A joint venture of Monument Oil & Gas plc, London, and Mobil Oil Corp. is expected this month to secure a contract that will give them a major stake in Turkmenistan's onshore oil production. This is the view of Wood Mackenzie Consultants Ltd., Edinburgh, which says a production-sharing agreement (PSA) for incremental onshore oil production is expected to be signed by Turkmen President Niyazov during a visit to the U.S.

April 20, 1998

4 min read

A joint venture of Monument Oil & Gas plc, London, and Mobil Oil Corp. is expected this month to secure a contract that will give them a major stake in Turkmenistan's onshore oil production.

This is the view of Wood Mackenzie Consultants Ltd., Edinburgh, which says a production-sharing agreement (PSA) for incremental onshore oil production is expected to be signed by Turkmen President Niyazov during a visit to the U.S.

The PSA, for which the Monument-Mobil combine gained exclusive negotiating rights in November 1996, covers incremental production from unallocated fields that lie north and south of the Nebitdag contract area of the South Caspian basin.

Monument-Mobil secured the Nebitdag license in mid-1996 and is currently working to boost production in Burun and Gizilgum fields and to evaluate exploration potential of the license area.

Monument says the Nebitdag area of western Turkmenistan covers a 2,000 sq km area of the Absheron trend. This prolific play runs roughly northwest to southeast across the lower part of the Caspian Sea (OGJ, Apr. 13, 1998, p. 34).

Burun redevelopment

The independent said its first objective is redevelopment of Burun field, which was producing 6,500 b/d of oil from 61 wells out of 220 drilled at the time it took over operatorship.

An initial workover program on eight wells already has increased production capacity by 8,000 b/d. Further workovers are expected to raise production to 20,000 b/d of oil from Burun by yearend.

The venture exported its first cargo in March, through an oil swap arrangement with National Iranian Oil Co. Monument is currently acquiring 3D seismic data to prove the full extent of Burun.

Wood Mackenzie said cumulative production in Burun field is 31 million bbl of oil. Monument's redevelopment is expected to prove up incremental reserves of 507 million bbl in Burun, and to lead to a production plateau of 100,000 b/d during 2002-5.

The analyst said Burun redevelopment is anticipated to take place in three phases, with the full field development plan to be finalized by September 1998.

Phase 1 is under way and will include a pilot water-injection program, along with maintenance of local oil pipelines and upgrading of the jetty and tanker-loading facilities at the port of Cheleken. Production after Phase 1 could reach 50,000 b/d, said Wood Mackenzie.

Phase 2 is expected to involve construction of additional field and power-generation facilities, plus starting of water injection and artificial lift operations and expansion of jetty and tanker-loading facilities. Burun output after this phase is expected to be 50,000-100,000 b/d.

Phase 3 is expected to include exploration, appraisal, and development of prospects in the Nebitdag area. There are also plans to upgrade the gas infrastructure and to build an oil export pipeline to Iran or join up to the planned Trans-Caspian pipeline (OGJ, Mar. 9, 1998, p. 27).

Monument says it is working with Mobil and state firm Turkmenneft to conclude a formal agreement with the government that will enable it to build on progress in developing Burun and exploring in Nebitdag area.

"Assuming Monument and Mobil gain rights to all the onshore fields, as anticipated," said Wood Mackenzie, "they will effectively control Turkmenistan's onshore oil production.

"The partners would have rights to incremental oil from these fields only, assuming they were all included in the PSA. Total remaining reserves in the onshore South Caspian basin are in the region of 1.1 billion bbl.

"Turkmenistan's oil production could rise to 280,000 b/d by the middle of the next decade if the entire area is assigned to foreign oil companies and significant investment is channeled into the sector.