The Soviet Union has taken the historic step of opening part of its territory to competitive bidding for oil and gas exploration and development by non-Soviet companies.
Two areas in the South Caspian and Amu-Daria petroleum provinces in Turkmen Soviet Socialist Republic (SSR) are being offered by the U.S.S.R. Ministry of Geology and the government of the Turkmen republic. One area lies near Chardzhou, where there is 60,000 b/d of refining capacity.
The areas cover a combined 34,749 sq miles and are highly prospective, said Edward Gendelman, president of Wavetech Geophysical Inc., Denver. They have existing major hydrocarbon production, well developed infrastructure, and favorable climate.
Small tract competitive bidding will be employed to select participating western companies. Size of the tracts was not disclosed.
The Soviets and successful bidders are expected to sign exploration and production agreements that conform with existing Soviet legislation on joint ventures.
The bidding expected to result from the Soviet initiative is not expected to be a one of a kind occurrence. The Soviets are considering a few additional territories for future rounds of bidding.
INTRODUCTORY PROCESS
The appropriate Soviet organizations intend to make the invitation to bid available next November or December, when high level Soviet oil and gas officials plan to visit the U.S.
The purpose of the visit will be to disclose details related to the potential of the offered areas and provide answers to oil company inquiries regarding E&P ventures in the Soviet Union.
Extensive exploration data sets will be available at that time.
Wavetech and Vnigni, a branch of the U.S.S.R. Ministry of Geology, will exclusively compile and distribute comprehensive exploration data on the areas to be opened for bids.
Sources of the announcement of the bidding opportunity are G.A. Gabrielyants of the Ministry of Geology and N.T. Souyounov, general director of production association Turkmengeologia, acting on behalf of the republic's government.
OIL, GAS POTENTIAL
Soviet explorationists rate the resource potential of the offered territories as very high, even by Soviet standards, Gendelman said.
Among the large existing oil and gas/condensate fields in the areas is 965 sq mile Dauletabed-Donmez field.
In spite of the large fields, the areas are largely undrilled and hold more than 100 major undrilled, prospective structures, Soviet data show. A big part of the areas contains widespread Jurassic salt deposition with major unexplored objectives and potential below it.
A well understood, fair, and uniform method of bidding for exploration rights will allow western oil companies of all sizes relatively easy access to large Soviet reserves, Gendelman said.
At the same time, the Soviets can expect a more equitable overall return on their resources and significantly accelerated and more efficient development of their reserves and infrastructure.
Wavetech and Vnigni are preparing a major study of the Pre-Caspian oil and gas province holding other areas being considered for leasing.
The study will be released to the industry by yearend, Gendelman said.
Copyright 1990 Oil & Gas Journal. All Rights Reserved.