Western joint ventures win FSU licenses

Pechora Sea Tract [19652 bytes]

Four joint ventures involving western companies have secured licenses covering oil and gas exploration and development in the former Soviet Union.

The licenses involve acreage in Russia's Pechora Sea, Komi republic, and Sakhalin Island areas and in Azerbaijan.

Pechora Sea tract

Russian geological authority Roskomnedra granted Pechomorneft AO a license to explore a tract off northern Russia in the Pechora Sea.

The area includes the Pomorskoye and Kolokolomorskoye prospects. Pechomorneft says it plans to begin initial studies in the license area, which will last 2-3 years. OGJ map sources show Pomorskoye as an oil and gas discovery.

Pechomorneft is owned 51% by Russian and 49% by Finnish partners as follows: Sevmorneftegeofizika 15%, Arktikmorneftegazrazvedka 10%, Mage 10%, Sojuzmorgeo 6%, Niimorgeofizika 5%, and the Nenets Autonomous Administration 5%; and Neste Oy 39% and Kvaerner Masa-Yards 10%. Finnish firms Neste and Kvaerner have been conducting seismic and environmental studies in the region since 1988.

Details of exploration plans have not been disclosed, but Neste said production from the license could commence within 4-5 years. Production start-up would require a separate license from the Russian government.

Komi tract

Elf Aquitaine 30%, Komi republic's state-owned Komitek 50%, and Neste 20% have formed a JV to develop and produce oil from four fields in the Shapkino area in the Nenets district and Komi republic north of the Timan-Pechora region near the Barents Sea.

Work is to get under way in winter 1996-97 on Shapkino South field, the first to be developed, by the JV SeverTek. The JV will be based in Usinsk, Komi.

SeverTek will be operator. But it is possible that when production sharing legislation is officially approved in Russia, the JV could operate along those lines. In that case, Elf would be the operator.

There were no disclosures about capital outlays or potential reserves.

Sakhalin Island

Sakhalin Petroleum plc, a London company owned half by British and half by Australian investors, has won a tender for exploration and production along the shore of Sakhalin Island off Russia's far eastern coast.

The Vostochno-Pribezhnaya license covers 70 sq km in the shallow Nabilsky Bay on the island's east coast. It is near giant Lunskoye discovery, which will be developed under the Sakhalin II project.

Sakhalin Petroleum said extensive seismic surveys of the Vostochno-Pribezhnaya tract have identified prospects, but the area has been closed to drilling for environmental reasons.

Mark Young, chief executive officer of Sakhalin Petroleum, said the company has committed to drill one well in each of four prospects on the license.

The Vostochno-Pribezhnaya license is held by Sakhalin Petroleum 32%, Sakhalinmorneftegaz 60%, and Vostokgeologiya 8%.

The U.K. independent also is negotiating to buy a 50% stake in the onshore Prizalivnaya license to the south.

This license is currently held outright by Vostokgeologiya, in which Sakhalin Petroleum holds a 10% share.

Here a discovery was made in the Soviet era and abandoned, said Young, because well productivity was thought too low. Sakhalin Petroleum plans to drill further in this area.

Young said that, following appraisal of both licenses, Sakhalin Petroleum expects its share of estimated reserves to exceed 50 million bbl of oil.

Sakhalin Petroleum was incorporated in November 1995, after attempts by Australian companies to pursue these licenses had come to a halt.

Azerbaijan

Ramco Energy plc, Aberdeen, disclosed an alliance agreement with oil field service company Schlumberger Logelco Inc. (SLI) for further development of Muradhanli field in Azerbaijan.

The agreement calls for SLI to act as field management contractor in Muradhanli, which was discovered in 1969 and lies 130 km southwest of Baku.

Ramco is negotiating a joint venture agreement with State Oil Co. of the Azerbaijan Republic (Socar) for development of Muradhanli.

Steven Bertram, group financial director of Ramco, said the deal will not be signed until tax and royalty terms are agreed.

Ramco claims onshore joint venture taxes and royalties amount to more than those in production sharing agreements recently granted for Caspian Sea development projects.

The company expects the issue will be resolved within the next few months, so the joint venture agreement can be completed later this year.

Production is currently at a low level. Ramco plans to boost output through horizontal drilling and expects an early determination of the project's commerciality. Oil in place is estimated at more than 1 billion bbl.

Socar has produced about 20 million bbl of oil from Muradhanli field, with output exported by rail via Baku to the eastern Black Sea ports of Poti and Batumi.

Another export option being considered is a link to the western pipeline export route planned by Azerbaijan International Operating Co. (AIOC).

This will carry early production from AIOC's Azeri/Guneshli/Chirag fields, currently under development by a group including Ramco (OGJ, Mar. 11, p. 104).