Uzbekistan seeking foreign partners for E&P projects

A.D. Koen
Senior Editor-News

Uzbekistan is seeking foreign partners for a long list of high priority oil and gas exploration and development projects.

Potential investors may propose joint ventures (JVs), production sharing schemes, or other forms of joint activity on a wide range of upstream prospects.

State company Uzbekneftegaz (UNG) is inviting companies to:

Explore for and develop new oil and gas reserves.
Develop oil reserves beneath gas caps in certain existing fields.
Implement redevelopment and secondary recovery programs in specified producing fields.
Develop oil and gas fields discovered by previous activity.

Seeking partners

A delegation of Uzbek officials led by Uzbekistan President Islam Karimov visited Houston in late June to brief prospective partners on oil and gas opportunities available in the country.

The U.S. Trade and Development Agency (Ustda) organized the conference with help from the Greater Houston Partnership, a local business promotion organization.

Uzbekistan since gaining independence from the former Soviet Union in 1991 has created a legal environment that guarantees the rights and protects capital investments of foreign partners. The country also has instituted a favorable tax regime.

At the same time, Uzbekistan has distinguished itself as the only former Soviet republic to increase oil output since becoming independent. UNG earlier this year ramped up oil output to 160,000 b/d, a level at which it became oil self-sufficient.

About 60% of Uzbekistan's total area of 447,400 sq km is prospective for oil and gas. To date, UNG has discovered and delineated 162 fields, 74 of which have been brought into production.

To demonstrate Uzbekistan's oil and gas potential, Karimov told companies attending the Ustda meeting in Houston he is releasing all available data describing the country's hydrocarbon resources. The information included previously secret geological data and maps developed by former Soviet government at a time when Uzbekistan's oil and gas output mainly was directed to meet demand in the Urals and other Soviet industrial areas.

"We are willing to open every door to you," Karimov said. "My goal is to reshape Uzbekistan into a model of the western economy through cooperation with U.S."

More JVs formed

The government's emphasis on developing energy resources-coupled with Uzbekistan's history of strong well productivity, extensive pipeline network, refining industry expansion and modernization, and revised foreign investment rules-should enable efficient companies to earn high returns, Karimov said.

Companies from 70 countries are working in Uzbekistan, but Karimov said the country especially wants to develop relationships with U.S. businesses.

Units of Texaco Inc. and Enron Oil & Gas Co. (EOG), Houston, used the Ustda meeting as a public forum for signing agreements strengthening their JV plans in Uzbekistan.

Texaco Overseas Holdings Inc. and GPO Uzneftepererabotka (UNPB) unit of UNG agreed to form Uz-Texaco JV to manufacture lubricants at an existing blending plant at UNPB's Fergana refinery. The Fergana refinery is the site of Uzbekistan's only lubricant blending facilities and hosts the only base oil manufacturing facilities in Central Asia.

Texaco acquired a 50.1% stake in the JV through an initial investment of $6.2 million. UNPB is contributing the Fergana blending facilities to Uz-Texaco under a long-term lease. Partners expect to commence full operations in first half 1997.

Uz-Texaco, through technology and trademark licensing agreements with Texaco, is to market Texaco branded products manufactured at Fergana and imported from other Texaco blending facilities to customers in Uzbekistan, Kazakhstan, Turkmenistan, Kyrgyzstan, and Tajikistan. The joint venture will buy additives from Texaco and base oils from UNPB through separate commercial agreements.

Uzbek gas JVs

Enron Oil & Gas Uzbekistan Ltd. (EOGU) and UNG agreed in an interim pact to extend and expand talks aimed at developing and marketing hydrocarbons in Uzbekistan.

Discussions under an August 1995 memorandum of understanding between the two companies focused mainly on terms of a proposed EOGU-UNG JV and on marketing and transportation arrangements with Russia's Gazprom. The interim agreement more clearly defined JV terms and designated 11 fields in Surkhandarya and Bukhara regions to be dedicated to the deal. Reserves within fields assigned to the possible JV are estimated at as much as 20 tcf of gas and 400 million bbl of liquids.

A Ustda funded study in the past year affirmed the feasibility of the project. In addition, the U.S. Overseas Private Investment Corp. in June agreed to provide $400 million in government backed financing and insurance for the proposed JV.

"We are optimistic that contracts could be finalized that would allow gas to begin flowing from these fields as early as 1998," said Forrest E. Hoglund, EOG chairman, president, and chief executive officer.

Also at the Ustda meeting, speakers presented updates about:

Installation at Kokdumulak field by M.W. Kellogg Co. and Nissho Iwai of a four train, 440 MMcfd gas compression plant. The $142 million project will enable UNG by yearend to begin reinjecting produced gas in the field. The pressure maintenance program is expected to recover more than 525 million bbl of condensate, extending to 57 years from 19.
A $600 million, 4 year project at Shurtan field began earlier this year and led by ABB Lummus Global BV to recover about 130,000 metric tons/year of ethane from Shurtan's gas production stream for conversion to linear low density polyethylene, mostly destined for agricultural uses.

Exploration JVs

Core to Uzbekistan's plans to spur upstream activity is formation of exploration JVs on eight tracts in five areas covering a combined 53,300 sq km. Individual exploration tracts are 1,900-12,000 sq km.

Exploration programs on the acreage are to include seismic surveying, drilling exploratory wells, and field development wherever justified.

UNG is proposing exploration JVs on:

Aral and Kuanysh-Koskala tracts in Karakalpak investment area, covering a combined 14,500 sq km in western Uzbekistan and occupying the eastern part of the Ustyurt plateau along the southwestern coast of the Aral Sea.
Girsan, Nishan, and Shakarbulak tracts in Beshkent investment area, covering a combined 6,400 sq km in southeastern Uzbekistan, including the southeastern part of Bukhara-Khiva region, considered one of the country's most promising oil and gas areas.
Gissar investment area, covering 4,400 sq km adjacent to Beshkent area and bounded on the northwest by Karail-Lyanger flexure-fracture zone, on the northeast by the Gissar mountain range, and on the southwest by Turkmenistan.
Surkhandarya investment area, covering 12,000 km adjacent to Gissar area and bounded on the west by the Kelif-Sarykamysh ridge, on the north and east by Tajikistan, and on the south by the Amu Darya River.
Namangan and Andizhan tracts in Fergana investment area, covering a combined 16,000 sq km in the Fergana Valley of eastern Uzbekistan.

Other opportunities

Development, redevelopment, and enhanced recovery opportunities for which UNG is seeking partners are spread across southern and eastern Uzbekistan.

The state company wnts foreign partners to propose projects:

For recovering oil under gas caps in 12 fields in the Bukhara-Khiva region of southern Uzbekistan with combined oil reserves of about 475 million bbl.
For rehabilitating and improving recovery in 15 oil fields producing for 20-30 years in the Bukhara-Khiva and Fergana regions, in which combined cumulative recovery totals about 250 million bbl of oil and remaining oil in place is estimated at about 800 million bbl.
For developing more than 30 new fields in Bukhara-Khiva region with combined reserves estimated at more than 8.2 tcf of gas, 156 million bbl of condensate, and 38 million bbl of oil.

Regional geologic setting

Thaddeus Dyman, a U.S. Geological Survey petroleum geologist based in Denver, said the geology of all five Uzbek exploration investment areas is extremely complex and highlighted by both Hercynian and Alpine tectonism.

Dyman and Bruce Vernor, president of Cevco, Herndon, Va., played key roles in preparing geological data and activity summaries for prospective investors. Dyman said Uzbekistan stratigraphically is characterized by several distinct though variable lithologic packages.

The pre-Jurassic strata-poorly understood because of a lack of drilling data-are inferred to exist along the Bukhara and Chardzhou steps and have been identified on the Ustyurt plateau. Wells on the Ustyurt plateau have penetrated Carboniferous carbonate buildups and clastic rocks and Permo-Triassic redbeds. Paleozoic basement rocks occur in the mountain ranges surrounding Fergana and Surkhandarya basins.

Continental clastic rocks overlain by upper Jurassic reef-bearing carbonates dominate the Lower to Middle Jurassic in Uzbekistan. The reefs form major reservoirs in the Bukhara and Chardzhou steps, Surkhandarya basin, and the Gissar area. Jurassic evaporites deposited over much of the region form seals above the reefs.

Carbonate and clastic rocks associated with marine transgressions dominate Cretaceous through Paleogene sedimentation, while marine and continental sedimentation associated with Alpine tectonism dominated during the Neogene.

Major source rocks include stratigraphic units spanning the region's entire geologic column from lower Jurassic through Paleogene, Dyman said.

The Karakalpak investment project is in western Uzbekistan on the eastern part of the Ustyurt plateau and includes part of the former portion of the Aral Sea.

Gissar and Beshkent blocks occur in a series of tectonic steps in southeastern Uzbekistan along the northern margin of Amudarya basin. Depth to basement increases to about 3 km from 1 km from northeast to southwest from the Bukhara step to the Chardzhou step.

Uzbekistan's easternmost basins, Fergana and Surkhandarya, are deep basins surrounded by rugged mountain ranges. Each contains more than 10 km of sediments.

Fergana is a Tertiary and early Mesozoic structural basin underlain by Paleozoic basement and extensively modified by the Alpine orogeny beginning in the Oligocene. Reservoirs in the basin are mixed clastics and carbonates, primarily Paleogene rocks.

Surkhandarya basin is similar to the Fergana. However, the basin's best reservoirs include Jurassic reef rocks, as well as Paleogene mixed carbonates and clastics.

Exploration area highlights

Uzbekistan to date has collected about 15,300 km of seismic data in Karakalpak project area and drilled about 420 km of footage.

Productive horizons in the area include Jurassic and Paleozoic reservoirs in structural and stratigraphic traps at 2,300-3,500 m.

UNG has prepared 13 prospects for drilling in the investment area and inferred 16 more prospects based on seismic data.

Urgin gas condensate field, with 1.4 tcf of reserves, is producing in Karakalpak area. Five more fields with combined reserves of almost 500 bcf of gas are ready to be brought into production.

UNG estimates Karakalpak re- sources at 4.9 tcf of gas and 570 million bbl of oil and condensate.

Previous activity in Beshkent investment area has accumulated 10,000 km of seismic data and more than 600 km of drilling footage. Productive horizons in the area occur at 2,500-3,800 m in Jurassic and pre-Jurassic structural and stratigraphic traps.

UNG estimates reserves in 14 fields delineated in Beshkent area at 2.6 tcf of gas, 219 million bbl of oil, and 58 million bbl of condensate. Undiscovered resources in the area are estimated at about 1.3 billion bbl of oil, 19 tcf of gas, and 262 million bbl of condensate. UNG has prepared 20 prospects for drilling and inferred 38 with seismic data.

UNG has collected about 2,500 km of seismic data on Gissar investment area. Depths of productive horizons are 1,200-3,500 m. Reservoirs are late Jurassic reefs and lower to middle Jurassic and older clastics and carbonates in structural and stratigraphic traps.

The state company has prepared nine prospects for drilling and identified 29 with seismic data. Reserves in the area's 10 confirmed fields are estimated at 5.4 tcf of gas, 51 million bbl of oil, and 95 million bbl of condensate.

UNG estimates the area's undiscovered resources at 15 tcf of gas, 300 million bbl of oil, and 277 million bbl of condensate.

Data on Surkhandarya investment area include about 6,700 km of seismic data and more than 500 km of footage. Productive horizons occur at depths of 200-5,800 m. Reservoirs in the western part of the area have been formed by Jurassic and Cretaceous structural and stratigraphic traps, while Paleogene clastic and carbonate structural traps occur across the entire tract.

UNG has prepared 30 prospects for drilling and identified 31 more with seismic data. Ten oil fields and one gas field within the area have combined estimated reserves of 1.2 tcf of gas and 343 million bbl of oil. UNG estimates undiscovered resources for all prospects in the area at about 23 tcf of gas and 2.7 billion bbl of oil.

Available data on Fergana investment area include 25,000 km of seismic data and 1,000 km of drilling footage. Productive horizons on the tract occur at 300-6,000 m, in reservoirs formed by structural and stratigraphic traps in Jurassic through Neogene clastic and carbonate formations.

UNG has prepared 11 prospects in Fergana for drilling and inferred 16 more through seismic data. Twenty-two existing and 7 prospective fields have estimated reserves of 1.7 billion bbl of oil and 630 bcf of gas.

UNG puts undiscovered resources of all prospects in the area at about 22 billion bbl of oil, 1 billion bbl of condensate, and 10 tcf of gas.