TASS: EXXON-SODECO DUE SAKHALIN CONTRACT

Moscow's Tass news agency has reported a combine that includes Exxon Corp. and Japan's Sakhalin Oil Development Corp. (Sodeco) will win a contract to develop oil and gas discoveries off the east coast of Sakhalin Island in the Soviet Far East.

The contract will be worth an estimated $6 billion, Tass said, making the project the largest joint economic venture involving Soviet, U.S., and Japanese entities.

Meantime, other joint ventures are taking shape as Soviet republics continue to beckon foreign partners and put western equipment to work.

Here are the latest developments:

• Benton Oil & Gas Co., Oxnard, Calif., agreed to form Geoilbent Ltd., a joint venture with two Russian partners, to explore, produce, and market oil and gas from N. Gubkinskoye field and certain adjacent fields in western Siberia. Benton will own a 34% interest in the venture. Each of the Soviet partners, exploration and production organizations in the Russian ministries that regulate natural resources, will own 33%.

• Kazakhstan will offer areas for oil and gas development on a competitive basis, possibly as early as mid-1992. Seismic data packages on the areas covering more than 100,000 sq km are to be available early next year.

• Allied Products Corp.'s Cooper division, Brady, Tex., received an order valued at about $6 million from the Ministry of Oil for 20 truck mounted service rigs for use in western Siberia. First shipment will go out next January, with the remaining rigs to be shipped in February. Cooper expects 30 days travel time.

• Quintana Trading Inc., a subsidiary of Quintana Petroleum Corp., Houston, signed a letter of intent with Pride Petroleum Services Inc., also of Houston, calling for Pride to provide service rigs for Quintana's POVH field workover program in western Siberia. Pride expects a contract to specify two rigs with crews and related equipment. It said its first rigs in the program will be ready to ship by mid-November and could be working in Russia as early as late December.

• Norway's Den norske stats oljeselskap AS opened an office in Moscow. Tass said Statoil hopes to develop close ties with the Soviets in western Siberia, Azerbaijan, and Kazakhstan, intending to produce oil and gas in those regions and establish a chain of retail gasoline stations in the country.

SAKHALIN ISLAND

Official announcement of award of the Sakhalin Island contract is expected Nov. 1, Tass quoted the lomiuri newspaper as saying.

Tass said representatives of the Soviet federal and Russian governments, along with the Sakhalin administration, chose the Exxon-Sodeco combine because Tokyo made Sodeco's participation in the project a condition for Japan's overall assistance to the Soviets. Sodeco is a partnership of Japan's C. Itoh & Co., Marubeni Corp., Japan Petroleum Exploration Co., and Overseas Petroleum Corp.

The Japanese government intends to support the project by allowing its Export-Import Bank to issue low interest credits to the Soviet Union.

What's more, Tass said, the Exxon-Sodeco combine proposed an "impressive, comprehensive plan" to improve the Sakhalin Island infrastructure by building housing, hospitals, roads, and communications lines.

Tokyo views backing of the project as a means to diversify energy supply sources. Sakhalin Island lies just north of Japan's Hokkaido Island (see map, OGJ, Mar. 18, p. 35).

Offshore fields are expected to start production in 1995. Most of the oil and gas will be exported to Japan, while the rest will go to the Soviet Far East, lomiuri reported.

GEOILBENT PROJECT

Benton's Geoilbent joint venture will have its headquarters in Tarko-Sale in the Tyumen region, about 1,500 miles northeast of Moscow.

The joint venture agreement and accompanying charter agreement for Geoilbent have been submitted to regulatory bodies for review and approval, expected to take 4-8 weeks. A preliminary economic feasibility study also was submitted, which will be amended by a more comprehensive version later this year.

Geoilbent will be an autonomous entity managed by a six member governing board made up of two members from each partner. Operations will be supervised by a directorate appointed by the board, with a Benton representative serving as either general director or deputy general director.

Most Geoilbent employees will be Russian nationals. Benton will provide personnel to assist in certain technical, marketing, and financial functions.

The agreements submitted to date call for operations to commence during 1992. Initial activities will include the drilling of production wells and installation of production facilities and transmission equipment.

Geoilbent plans to export oil and natural gas liquids for hard currency, while natural gas will be sold domestically for rubles.

Projections and budgets for 1992 and later years' oil and gas production, capital outlays, operating expenses, taxes, and other financial considerations will take final shape as the comprehensive feasibility study is completed.

KAZAKH ACREAGE

The areas to be offered in Kazakhstan and the makeup of data packages were outlined last week in Houston by representatives of the Kazakh government, PGO Kazgeofizika, and Halliburton Geophysical Services (HGS).

A firm date to begin offering the blocks has not been set because companies will need time to study the areas, a Kazakh official said.

All data in the packages are owned by PGO Kazgeofizika and will be made available through HGS, its joint venture partner.

The blocks to be offered for development vary in size but typically cover about 800 sq km. They include existing fields and opportunities for exploration.

Kadyr Baikenov, vice-chairman of the Council of Ministers of the Kazakh S.S.R., said a law is being prepared that will cover oil and gas exploration, development, processing, and transportation in the republic which "defines the general rules and economic and social conditions for participation of foreign investors" in the Kazakh S.S.R.

Baikenov said the State Committee for Geology and the Preservation of Deposits will regulate oil and gas operations in the republic. That committee is directly subordinate to the government of Kazakhstan and is included in the Cabinet of Ministers of the republic.

"The Ministry of Geology of the U.S.S.R. and the Ministry of Oil and Gas of the U.S.S.R. are, at the present moment, liquidated," Baikenov said.

The governments of the Russian and Kazakh republics have agreed to work together to permit export of oil from Kazakhstan, Baikenov said, although Kazakhstan will be charged for transportation services provided by Russia.

Baikenov also said Kazakhstan plans to invest in a pipeline through Russia to the port of Novorossysk on the Black Sea to facilitate exports.

KAZAKH DATA PACKAGES

The six data packages to be offered by PGO Kazgeofizika through HGS will cover areas that are defined by geological and geographical boundaries.

Packages will be built on three levels: Level 1 is based on a 15 km x 15 km grid of seismic profiles, level 2 on a 6 km x 8 km grid, and level 3 on a 2 km x 2 km grid.

Level 1 and 2 data for the six areas cover about 136,000 sq km. Level 3 includes about 101,000 sq km. Areas included are:

• The eastern side of the pre-Caspian basin.

• An area on the southeastern side of the pre-Caspian basin.

• The Sagiz region in the center of the pre-Caspian basin.

• An area between the Volga and Ural rivers.

• Blocks on the Buzachi peninsula.

• The northern Ustuart region.

A spokesman for HGS expects the data packages to be available by late January 1992.

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