The four blocks parallel the Dagestan shoreline northwest of the border with Azerbaijan. The blocks extend 10 miles seaward from the shoreline. Almost all of the area is in 50 m of water or less, with a small part of the southernmost block in more than 100 m of water.
From south to north, the blocks and areas are: Derbetovsky block, 1,300 sq km; Izberbashsky block, 670 sq km; Dimitrovsky block, 920 sq km; and Sulaksky block, 610 sq km.
The Izberbashsky block surrounds Inchkhe-More oil field, Dagestan's only Caspian Sea production, which is excluded from the bidding. A consortium operates Inchkhe-More field.
A 28 in. oil pipeline and a 48 in. gas pipeline extending from Azerbaijan to Novo- rossiisk, Russia, parallel the shoreline within 1-10 km of the three southernmost blocks. Dagestan has an oil terminal at its capital, Makhachala.
Dagestan said that the three southern blocks are prospective in Neogene through Jurassic formations at 1,000-6,000 m. Sulaksky is prospective in Neogene through Cretaceous at 2,500-6,000 m.
Nikolay Pinchuk, Russian Federation minister of natural resources, said the Russian firms Gazprom, Lukoil, Sidanca, and Yukos are interested in the tracts but that a public bid round is being launched in order to involve non-Russian entities.
A tender committee is to evaluate the bids during Apr. 12-29, 1998.
Bid terms
Dagestan offered the tracts for 25 years, including a 5-year exploration period and 20-year production term.Bidders are to submit:
- A reasonable work program and technological and economic parameters for exploration operations.
- A description of technology (with consideration of environmental issues) and a development schedule in case of a commercial discovery.
- Offer of payments to finance social infrastructure projects in Dagestan upon award of a license and after the start of exploration.
- Proposals on the sizes of bonuses for commercial discoveries, irrespective of the amount of recoverable reserves, and of regular payments.
Minimum work requirements include no less than 1 line-km per 1 sq km of block area for 2D seismic. Justified changes in amounts of 2D surveying are permitted for 3D seismic surveying. Drilling requirement is no fewer than three wells during the first 5 years "on existing or new prospective structures."
Bidders are required to purchase bid packages on individual or all blocks. Dagestan said 610 km of selected seismic data and well log data for 32 wells are included.
Dagestan is the largest republic in the Russian North Caucasus. Geologically, it is at the junction of the Epipaleozoic Skifean plate and the Alpian orogenic belt.
The republic has 51 oil and gas fields, of which 15 are located in Piedmont Dagestan. The largest are Dimitrovskoye and Inchkhe-More. The main oil and gas reservoirs are in Cretaceous, Paleocene-Eocene, and Miocene in southern Dagestan and Mesozoic in northern Dagestan.
Reserves are estimated at 930 million metric tons of oil equivalent (mtoe), of which 408 million mtoe are offshore. The majority of undiscovered hydrocarbon reserves is believed to occur within the Cretaceous-Eocene deposits of Dagestan's belt of overthrusts and autochthonous structures offshore.
Petroleum Geo-Services, Oslo, is assisting with the bid round.
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