FOREIGN PARTICIPATION IN U.S.S.R. JOINT VENTURES CONTINUES TO GROW

International participation in Soviet joint venture activity continues apace, despite uncertainty and turmoil in the crumbling U.S.S.R. Among the latest developments:

Oct. 21, 1991

5 min read

International participation in Soviet joint venture activity continues apace, despite uncertainty and turmoil in the crumbling U.S.S.R.

Among the latest developments:

Independents Premier Consolidated Oilfields plc, London, and Grynberg Production Corp., Denver, have signed a protocol for an exclusive exploration, development, production, and processing agreement covering 11 million acres in the Central Caspian Sea. The block covered by the agreement is near Azeri field, to be developed by a group involving units of Amoco Corp., British Petroleum Co. plc, Unocal Corp., and Norway's state owned Den norske stats oljeselskap AS, among others (OGJ, Oct. 7, p. 28).
Norsk Hydro, Oslo, has agreed to lead a feasibility study of developing oil and gas reserves in seven fields near Archangel in the northeastern part of the Timan-Pechora basin near the Arctic Circle.
Results of bidding by international groups to develop oil and gas resources off Sakhalin Island in the Soviet Far East have been delayed until the end of November. Successful bidders were originally to be announced Oct. 5, but differences among Soviet organizations about the final shape of the offshore projects have led to delays. Evaluating the companies and their proposals has also taken longer than expected.
McDermott International Inc. agreed to form a 50-50 joint venture with the Soviet Union's Shelfprojectstroy to pursue marine fabrication and installation contracts. Shelfprojectstroy operates a marine construction yard in Azerbaijan and is the largest offshore marine contractor in the Soviet Union. McDermott unit Hudson Engineering Corp. is prime contractor for Azeri field development, and the parent is a participant in Azeri development.
Ingeo, a 50-50 joint venture of Input/Output Inc. (101), Stafford, Tex., and Soviet geophysical enterprise Industrial Amalgamation Geophyspribor, Moscow, has been approved and registered with the Russian Republic, Under terms of the venture, Ingeo will manufacture seismic instruments for sale worldwide and provide various seismic services within the U.S.S.R. The venture is expected to be fully operational by yearend. 101 designs, manufactures, and markets seismic instruments, including land seismic data acquisition systems.
The final steps in negotiating Chevron's joint venture in the republic of Kazakhstan (OGJ, Aug. 5, p. 14) will be "more complicated" as a result of growing uncertainties following the attempted coup in the Soviet Union in August, says Richard H. Matzke, president of Chevron Overseas Petroleum Inc. A key reason is that Kazakhstan "is in the forefront" of the movement by republics to extricate themselves from central government control, Matzke told the annual meeting of the Society of Petroleum Engineers in Dallas earlier this month. "Chevron is approaching our potential joint venture with a good measure of prudent caution," Matzke said. Despite the risk, Matzke said Chevron is pursuing opportunities there because "nowhere in the world is the potential for developing huge reserves as great as in the Soviet Union."

CASPIAN, VENTURE

Premier/Grynberg's protocol was signed with the republic of Dagestan, a sovereign republic within the Russian Federation, and the republic owned oil company Dagneft.

Premier said it is in advanced discussions to bring in other western partners.

The 11 million acres cover the entire Dagestani offshore and are immediately north of Azerbaijani waters where the Amoco group is to develop Azeri field.

The protocol calls for a feasibility study of developing Inchkhe-More, an offshore field with reserves that are pegged at about 100 million bbl.

The field lies in 40 ft of water about 6.2 miles offshore.

The Soviets drilled seven delineation wells and tested three wells with what was described as excellent results from Miocene horizons at about 6,000 ft.

The field also has deeper potential in Cretaceous and Jurassic, main pays in Dagneft's onshore production, Premier said.

In addition, geophysical studies by the Ministry of Geology, Moscow, showed at least 18 additional anticlinal structures off Dagestan that appear prospective and warrant drilling, Premier said.

Premier said activity will move forward on two fronts. Plans are under way to acquire new seismic data during the next 6-12 months in preparation for a drilling campaign.

The feasibility study on Inchkhe-More would focus on an early production option to give cash flow in advance of full scale development.

Premier hopes to see first oil produced in 1-2 years.

Premier said the Dagestani government is interested in the use of western technology, especially in light of its concerns about the environmental aspects of any new offshore development.

The Caspian Sea is severely polluted from existing oil projects outside Dagestan, Premier noted. The agreement also gives the western combine rights to start a refining operation in Dagestan. Premier sees this as a long term option.

In the short term, oil from the new offshore development will use spare capacity in an existing oil pipeline across the Caucasus to Novorosijsk on the Black Sea.

NORSK HYDRO GROUP VENTURE

Norsk Hydro's work will be undertaken under an agreement with two Soviet companies, Arkangelsk-Geologia and Intergeo-Modell, and Exploration Co. of Sweden.

The study is to be complete by spring, and if a decision to proceed is made, first production from the 5,500 sq km tract could occur before the end of 1992.

The Soviets drilled 40 wells in the fields, five of which are fairly well delineated. First output would start from an early production system based on a number of exploratory wells.

The feasibility study also will cover a proposed onshore processing plant and export of oil by sea.

The onshore feasibility study is Norsk Hydro's second venture in the U.S.S.R.

With Conoco Inc. and a group of Finnish companies, Norsk Hydro is looking at plans to develop Shtokmanovskoye gas field in the Barents Sea. Norsk Hydro is responsible for Shtokmanovskoye development, and Conoco is handling gas transportation and marketing.

Two wells drilled in the field by the Soviets were tested this fall with western equipment. Norsk Hydro, responsible for one of the tests, said the well flowed at a combined rate of 123 MMcfd from two zones. Four wells have been drilled, and a fifth is planned to complete acquisition of field data.