Provision of Engineering, Procurement, Construction and Start-Up (Isspe) Offshore Garagol-Deniz West Petroleum Development Project in TURKMENISTAN

Provision of Engineering, Procurement, Construction and Start-Up (Isspe) Offshore Garagol-Deniz West Petroleum Development Project in TURKMENISTANTI Ref No: 10932367 Date : 29 Mar 2012 Description: Provision of Engineering, Procurement, Construction and Start-Up (Isspe) Offshore Garagol-Deniz West Petroleum Development Project, TURKMENISTAN Deadline: 10 Apr 2012 Document Type Tender Notice ========= The future for gas in Turkmenistan’s portion of the Caspian Sea Oleg Lukin 25 July 2011 | 6:54 GMT Petronas started up gas production in Turkmenistan’s section of the Caspian Sea earlier this month – so how are other projects in the offshore coming along. And what will the companies do with the gas? Turkmen President Gurbanguly Berdymukhammedov, right, and Malaysian Prime Minister Najib Razak at the opening ceremony of a Petronas gas refining plant in Kiyanly, Turkmenistan on 12 July. (PA) Related stories •Turkmenistan: reality does not match ambition •Second West-East pipeline’s eastern section goes into operation •Turkmenistan ups natural gas exports 77% for first half 2011 •Third line of Turkmenistan-China gas pipeline to be completed by 2013 Malaysia’s Petronas became the first company to produce natural gas from Turkmenistan’s portion of the Caspian Sea on 12 July. The operators of other production-sharing projects in the Turkmen sector also plan to produce gas, for export to either Iran or Russia and, in future, to EU countries via the Southern Gas Corridor. Offshore gas from Petronas The Malaysian group started up a gas treatment complex and onshore gas terminal near the village of Kiyanly. The facility, which will prepare gas from the Magtymguly offshore field for export, cost $500 million. It has capacity for 5 billion cubic metres a year, upgradable to 10 bcm. After treatment, the gas enters the Turkmenistan gas transportation system via a 53 km pipeline that ties the Kiyanly facilities to the Ekerem-Garabogaz export pipeline. Turkmen President Gurbanguly Berdimuhamedow and Malaysian Prime Minister Haji Mohd Najib bin Tun Haji Abdul Razak attended the 12 July ribbon-cutting ceremony. “The start of commercial natural gas production on Turkmen’s Caspian shelf has great significance, not only for the national economy, but for Turkmenistan’s policy aimed at ensuring global energy security and wide-ranging international cooperation,” Berdimuhamedow said at the ceremony. The Turkmen sector of the Caspian Sea contains more than half of the sea’s oil reserves and about one-fourth of its gas reserves, he said, citing forecasts from geologists. Turkmenistan aims to diversify its natural gas export markets, in line with the nation’s energy strategy. All of Turkmenistan’s gas production previously came from onshore fields. The gas is exported to Russia (on the Central Asia-Center pipeline system), China (Turkmenistan-Uzbekistan-Kazakhstan-China pipeline) and Iran (Korpeje-Kordkuy in western Turkmenistan and Dauletabad-Sarakhs-Khangiran in eastern Turkmenistan). Turkmenistan exported 22.6 bcm of gas in 2010. There are also plans to build the Turkmenistan-Afghanistan-Pakistan-India gas pipeline, which will have capacity for 33 bcm per year. Construction is tentatively scheduled to begin in 2012 and be completed in 2014-2015. Ashgabat is also looking at opportunities to deliver gas directly to Europe. That would involve construction of the Trans-Caspian gas pipeline across the Caspian Sea to Baku, where it would join the existing Baku-Tbilisi-Erzurum pipeline and be shipped to the planned Nabucco pipeline, scheduled to be built by 2017. The EU is currently in talks with Turkmenistan to secure guarantees of long-term natural gas deliveries. OMV, one of the Nabucco shareholders, believes the pipeline would need to deliver between 10 and 16 bcm of Turkmen gas a year. However, the resource base for future deliveries has not been determined yet. Nabucco might be supplied in the future with gas from Petronas and other foreign operators developing offshore fields in Turkmenistan’s Caspian sector. Exploration success Turkmen geologists and US Western Geco, which researched the Turkmen sector in the early 2000′s, believe the in-place resources total 12 billion tons of oil and 6.5 trillion cubic metres of gas. Thirty-two blocks in the sector were designated for development under production-sharing agreements. Petronas was the first foreign company to conclude a production-sharing agreement (PSA) with Turkmenistan when it signed the contract to Block 1 on the Turkmen shelf in 1996. The 25-year licence to the block is registered with Petronas Charigali (Turkmenistan) (PCT), the 100% project operator. Block 1 covers 1,900 square km and includes the Magtymguly (formerly East Livanov), Ovez (Central Livanov) and Diyarbekir (Barinov) fields. In the 15 years since the PSA was signed, comprehensive seismic surveying and the drilling of 14 exploration wells and one appraisal well indicated major oil and gas reserves at the three known fields and the newly discovered Mashrykov and Garagol-Deniz fields. Recoverable reserves in Block 1 total about 75 million tons of oil and 245 bcm of natural gas, Petronas says. An appraisal well, which it plans to drill at Garagol-Deniz this year, is expected to increase those totals. Petronas began test production at Diyarbekir in 2006. Production currently totals 300,000 tons per year. Commercial oil production is slated to commence in 2013. Given the major gas reserves discovered in the survey, PCT and Turkmenistan’s Ministry of Oil and Gas Industry and Mineral Resources signed an agreement on the development of gas fields and the construction of the gas treatment station and onshore terminal in Kiyanly in 2006. Construction of the facilities began in June 2007. The gas project will see construction of the Magtymguly Collector Riser Platform-A, from which hydrocarbons will be delivered to shore via 73 km undersea pipelines for gas, condensate and monoethylene glycol. Phase I of the gas project at Magtymguly will see production of 5 bcm a year. Volumes will rise to 10 bcm a year as production from new fields is added in the next two-three years, Petronas said. Petronas plans to produce 2.4 million tons of gas condensate a year in Phase I, subsequently rising to 4 million tons a year. After removal of natural gas liquids, the stabilized condensate will be marketed as Kiyanly Light crude oil. The oil will be stored for later export on tankers. Offshore gas export routes During Najib’s visit to Turkmenistan, PCT signed a contract on gas sales with the Turkmen Presidential State Agency for Management and Use of Hydrocarbon Resources and the state oil company, Turkmengaz. The contract will provide for sale of 5 bcm of gas a year delivered to the Ekerem-Garbogaz pipeline. From there, the gas could be exported on the Central Asia-Center-3 pipeline (for export to Russia Kazakhstan) or to Korpeje-Kordkuy (Iran). In the first phase, the gas would initially be sold on the domestic market. Later on, gas might be exported to Iran and Russia as Turkmengaz sees fit. The Malaysian side has not disclosed the price that Turkmengaz will pay Petronas for the gas. Potential offshore gas sellers Another company that will begin supplying gas from offshore fields is Dragon Oil, a UAE-headquartered company that began developing the Cheleken block in 1999. Cheleken includes the Dzheitune and Dzhygalybeg fields with reserves amounting to 639 million barrels of oil and 3 tcf (84.96 bcm) of gas, according to Dragon Oil data. So far the company has only produced oil: about 2.2 million tons in 2010. It flares most of the associated petroleum gas it extracts. Dragon Oil drew up a project for commercial use of the gas in 2009, which targets production of 2 bcm of commercial gas, between 75,000 and 100,000 tons of LNG and approximately 300,000 to 400,000 tons of gas condensate. The project includes laying a 30 inch- (76 cm) diameter pipeline to shore and the construction of a gas treatment station and an LNG plant. The gas treatment station will separate out the condensate and propane-butane fractions to produce dry gas. Investment will amount to $600 million to $700 million in the 2010-2012 period. Dragon Oil planned to launch the gas project in 2009, based on the assumption Ashgabat would need the gas, given its agreement to export 70 bcm a year to Russia up to 2028 that commenced in 2010. However, the decline in gas prices following the onset of the global financial crisis caused Gazprom to reduce imports of Turkmen gas to 10.5 bcm in 2009-2011, compared with 40 bcm in 2008. However, Dragon Oil will have an opportunity to begin selling its gas – if not this year then in the next few years – thanks to Ashgabat’s 2010 agreement with Iran to boost exports to 14 bcm a year (from 8 bcm previously) and to 20 bcm at an unspecified point in the future. The agreement accompanied the completion of the Dauletabad-Sarakhs-Khangiran pipeline with capacity for 12.5 bcm a year. The Korpeje-Kordkuy pipeline in the Caspian coast region has capacity for 14 bcm a year, of which 8 bcm can be supplied from onshore fields, leaving 6 bcm of capacity available for gas produced at offshore fields. In addition, if Turkmenistan signs a long-term supply contract with Nabucco, Ashgabat will want to purchase gas from Dragon Oil and Petronas to export on the planned system to Europe. A Russian consortium also plans to produce gas on Turkmenistan’s shelf. Itera signed a PSA to develop Block 21 in the southwestern portion of the shelf in September 2009. Recoverable reserves in the contract territory amount to 219 million tons of oil and 92 bcm of gas, according to preliminary estimates. Development will cost an estimated $6 billion. In November 2009, Russian state-owned Zarubezhneft accepted an offer from Itera to take a 51% stake in the project, an alliance that the Turkmen side has approved. Zarubezhneft created a new company, Nestro-Caspian, which will become the operator of the PSA once Turkmen government formalities are completed. Itera and Zarubezhneft invited Rosneft to join the project in April 2011. Ashgabat is expected to provide clearance for the deal in April 2011. Geochemical and 2D and 3D seismic surveying will be carried out over the 1,200-square km territory in 2011-2012. The first exploration well will be drilled in 2012. Three wells will be drilled in the exploration period. Production is projected to peak at 11 million tons of oil and 4.5 bcm of gas a year. Itera will use some of the gas to supply a nitrate fertilizer plant with capacity for 650,000 tons of urea a year that it plans to build. It will sell the rest. Another property, Block 23, is forecast to contain major gas reserves. The 940 square km territory, located in the south-eastern portion of the shelf, is being developed by German RWE, one of the Nabucco shareholders. A subsidiary, RWE Dea AG, signed a PSA for the project in July 2009. It will conduct seismic surveying over 400 square km and drill three exploration wells in 2011-2012. Investment will total an estimated $1 billion. The outlook for the combined Block 11-12 is less clear. The participants in the production-sharing project include German operator Wintershall, Danish Maersk Oil and Indian Oil and Natural Gas Company. Maersk signed the PSA in 2002 and Wintershall and ONGC joined later. 2D seismic surveys indicated major oil and gas traps in the contract territory, including the Garadashlyk structure. However, two exploration wells did not yield commercial volumes. 3D seismic surveys are currently being conducted at the fields. Turkmenistan has plans to conclude PSAs on other gas blocks in the Caspian. Talks are underway with Total, GDF, BP, OMV, Shell, Chevron, ExxonMobil and Marathon Oil Corp, as well as with KazMunayGas. In August 2010, President Berdimuhamedow ordered the government to expedite a selection of companies to develop Blocks 19 and 20, for which proposals have been received from Chevron, ConocoPhillips, and UAE-based Mubadala Development. The Turkmen sector of the Caspian is shaping up as a resource base for new gas pipelines supplying Europe, particularly the Trans-Caspian gas pipeline, whose design capacity has not been determined yet. Another pipeline project – the Caspian gas pipeline – which will see construction of a pipeline with capacity of 30 bcm a year through Kazakhstan and Russia, is under consideration. Russia, Kazakhstan and Turkmenistan signed an agreement on construction of the pipeline in 2007. However, Russian President Dmitry Medvedev and Berdimuhamedow decided at a meeting in October last year to halt the project, pending growth in demand for gas in Europe. ====== India : India and Kuwait to endeavor finalizing Joint Venture Projects in oil & Gas Sector Publish Date : 13-Mar-2013 India and Kuwait today resolved to expedite discussions for promoting joint venture projects in various areas of oil & gas sector including those in the upstream & downstream activities. Speaking at a meeting with Sheikh Nasser Sabah AL-Ahmed AK-Jaber AL-Sabah, Minister of Amiri Diwan Affairs, Kuwait, here today, Dr. M.Veerappa Moily, Minister of Petroleum and Natural Gas said that the two sides should give new momentum to the warm & friendly long-standing relations. He said we should move fast beyond discussions and finalize the projects for cooperation in the oil and gas sector. Dr. Moily invited Kuwaiti companies to invest in the opportunities in a number Petro-Chemical projects, refinery projects, and upstream-exploration & production ventures in India. The Minister cited examples of up-coming Petro-Chemical Projects at Dahej, Mangalore and Paradeep which offer possibilities for Kuwaiti companies to pick up stakes for mutually beneficial cooperation. Similarly our companies would be keen to participate and invest in various projects in Kuwait’s E&P, refinery or Petro-Chemical sectors. The Minister also proposed participation of EIL in the development of Kuwait’s oil industry projects. Sheikh Nasser Sabah AL-Ahmed AK-Jaber AL-Sabah welcomed the proposal deeper cooperation between the oil sector companies of India and Kuwait. He suggested that the experts of the two sides should sit together to deliberate on specific projects. He invited representatives Indian Oil PSUs to visit-Kuwait for taking forward the initiative. The Kuwait Minister assured his full support to the on-going and future cooperation in the sector. Sheikh Al-Sabah was accompanied during the meeting among others by Mr. Farook AL-Zanki, CEO, Kuwait Petroleum Corporation. Dr. Moily on the other hand was accompanied by Indian Ambassador to Kuwait Shri Satish C Mehta, Chairman Indian Oil Shri R. S. Butola, CMD EIL Shri A. K. Purwaha, MD ONGC Videsh Ltd (OVL) Shri D. K. Sarraf and Director (HR) ONGC Shri K S Jamestin. ====== Dragon inviting tenders for Turkmen offshore rigs, platforms ASHGABAT, Turkmenistan – Oil Production from the Cheleken Contract Area in the Turkmen sector of the Caspian Sea averaged 70,600 b/d in the first quarter of 2012, according to operator Dragon Oil. This represents a 22% increase compared to the corresponding quarter in 2011. Five new development and appraisal wells have been put into production so far this year, including a side track of an existing well in the Dzheitune (Lam) field. Three new development wells are currently being drilled in this field: 13/171, 28/169, and C/170, by two platform-based rigs and a jackup. However, delivery of the new build jackup Caspian Driller is delayed by subcontractor issues and the rig now is expected toward end-2012, ready for drilling in 1Q 2013. It will be leased for five years, with an option for a further two years. To support the planned drilling campaign in the years ahead, Dragon is seeking to lease further platform-based rigs. It is tendering for two land rigs and aims to secure at least one by the end of the year, which could be ready for drilling early next year. Dragon has also started the tendering process for up to two newbuild jackups, and aims to award contracts toward the end of 2012. Construction should then take two to three years. Ongoing infrastructure projects include construction and installation of additional platforms for drilling new development wells, in-field pipelines, and a facilities upgrade to cater for future growth in production. The Dzhygalybeg (Zhdanov) A platform for block 4 should be delivered by the end of this year and be ready to drill in 1Q 2013. Work on the Dzhygalybeg (Zhdanov) B platform is progressing as planned and the facility should be ready for drilling during the first half of 2013. Dragon expects construction of the new Dzhygalybeg (Zhdanov) block 4 gathering platform and installation of associated in-field pipelines to be concluded during the second half of this year. Tendering has started to select contractors to build and install the Dzheitune (Lam) D and E platforms and associated pipelines, and awards are due by end-2012. These platforms will be suitable for drilling with a jackup, with eight slots each initially. Later this year, Dragon plans to start the tendering process for construction and installation contracts of the Dzheitune (Lam) F, G, and H platforms and associated pipelines. The Dzheitune (Lam) F facility will accommodate a platform-based rig with initially 16 slots, while the Dzheitune (Lam) G and H platforms will suit deployment of a jackup and will have eight slots each. Dragon will also invite international contractors to build a fabrication yard in the Hazar harbor area in Turkmenistan, offering expanded load-out capabilities, related facilities, and berths, with completion by end-2013. Earlier this year, the company issued a contract for a front-end engineering and design (FEED) study of another subsea trunkline to transport oil and gas onshore to accommodate planned production growth beyond 2015. This is subject to the outcome of a water injection pilot scheme over the next two-three years, initial flow rates in the Dzhygalybeg (Zhdanov) field, and overall performance from the area. Over the next two to three years, Dragon Oil plans to undertake a berths upgrade, channel dredging, and breakwater construction at Aladja Jetty and in the harbor area to enhance its operational and crude oil loading capacity. Finally, Dragon plans to triple crude oil tank storage capacity at the Central Processing Facility: a FEED study is under way. 4/16/2012 =============