CUBA, SOVIET DEALS HIGHLIGHT TOTAL E&D PUSH

Total Cie. Francaise des Petroles has taken some major steps in worldwide exploration and development.

Here's what's happening:

A Total unit, along with another French concern, signed the first production sharing agreement between Communist Cuba and a foreign company.
Another Total unit signed a production sharing agreement with a department of the Soviet Union's Ministry of Geology covering exploration, development, and production of oil and gas in the U.S.S.R.'s Timan Pechora basin.
Total plans to double its Indonesian gas production by the mid-1990s. It's part of an overall push by the French company to hike its worldwide gas production by 50% in the next 4-5 years.
Total tentatively earmarked 900 million francs/year for worldwide E&D to 1993, assuming $20/bbl and a U.S. dollar exchangeable for 5.25 francs in 1991. That compares with its E&D outlays of 450 million francs in 1990.

CUBAN DEAL

Total Exploration Cuba in tandem with Cie. Europeene des Petroles (CEP), a subsidiary of the trading group Interagra, signed their production sharing agreement with Cuba's state owned Union del Petroleo de Cuba.

Under the contract, Total and CEP are committed to conduct 1,800 line km of seismic surveys and drill four wells during a 6 year period.

Their 2,000 sq km block is in the Santa Clara area off Cuba's northern coast, about 160 km east of Havana. It is adjacent to a block in Cardenas Bay where Soviet agencies reportedly discovered oil and gas.

Total has put out an international call for seismic work bids and expects work to start next month. The French companies will be responsible for all capital, equipment, technology, and specialized personnel.

Most of Cuba's 16,000 b/d of oil production comes from small fields along the north coast. Cuba has been heavily dependent on imports of oil from the Soviet Union, which were curtailed sharply this year.

SOVIET AGREEMENT

Total U.S.S.R., a wholly owned subsidiary of Total, signed an agreement with Uktaneftgasgeologica under which the French company will explore, develop, and produce hydrocarbons in certain areas of the Timan Pechora basin in Komis Republic, west of the Urals near the Arctic Circle.

The acreage, which covers 5,000 sq km, includes areas where oil has been discovered but never produced as well as structures that have never been drilled.

Operator Total plans to begin producing as much as 20,000 b/d by yearend 1991 from existing undeveloped fields on the Soviet acreage. It has asked for bids for drill pipe.

The gravity of the oil to be produced from the Soviet acreage is relatively light, and under the production sharing agreement signed with Soviet authorities Total will be free to market its crude however it wishes.

Thierry Desmarest, Total manager of exploration and production, said the Soviets are giving a free hand to Total in this instance. There were none of the long discussions and arguments that have so far prevented start-up of an enhanced recovery project in Romashkino field. Total signed the Romashkino agreement with Tatneft Dec. 6, 1989.

The Timan Pechora agreement falls within Total's strategy in the Soviet Union to develop areas where discoveries have been made but remain undeveloped for lack of funds or advanced technology.

INDONESIAN PUSH

Total will increase its gas production in Indonesia from Handil, Bekapaf, Tambora, and Tunu fields to about 970 MMcfd by 1995-97 from about 390 MMcfd in 1990.

The company has earmarked $300 million the next 3 years to boost production from Tunu to about 339 MMcfd from about 145 MMcfd.

Overall, Total expects to spend about $1 billion during the 1990s on Indonesian gas projects.

Desmarest said much of the increased gas production will be sold to Japan's Osaka gas utility. Indonesia's state oil company Pertamina signed a deal Oct. 23 with the utility for supply of 2 million metric tons/year of LNG during 20 years. Total's interest in the supply contract is 65%.

A sixth LNG train will be placed on stream in Bontang, the world's biggest LNG complex with current capacity of 290 MMcfd.

Desmarest believes Total has the capacity to supply other countries in the Far East in addition to Japan. Tunu proved reserves are conservatively estimated at 2.825 tcf, but Desmarest believes far more could be found in the area.

Discussions are under way to line up future supplies for other customers, including South Korea.

A contract has been signed with Taiwan, which has begun taking delivery of Indonesian LNG with start-up of the fifth LNG train at Bontang in 1990.

OTHER GAS SUPPLIES

Total is pressing efforts to find and develop gas elsewhere in the world.

Desmarest says Total is capable of hiking gas production from all its fields outside the Middle East by 50% during the next 4-5 years.

Total's non-Middle East gas reserves last year jumped to 1.65 billion bbl of oil equivalent (BOE) from 1.5 billion BOE.

In the Gulf of Thailand, following technical studies carried out in 1989-90, Total soon will start construction of offshore production and processing facilities in Bongkot field to produce as much as 242 MMcfd of gas by mid-1993. Interests in Bongkot, formerly known as the B structure, are held by state owned Petroleum Authority of Thailand 40%, Total 30%, and British Gas plc and Den norske stats oljeselskap AS combined 30%.

Bongkot reserves are believed to exceed 1.765 tcf. The gas will move via pipeline to landfall along one of several possible routes and then overland to Bangkok (see map, OGJ, Oct. 22, p. 23).

Total capital investment is estimated at $400 million, with perhaps $20-30 million more for incremental future increases in production.