Turkmenneft, Petronas sign PSA for blocks 19 and 20 in Caspian Sea

ASHGABAT. June 22 (Interfax) - The Turkmenneft state concern has concluded a production sharing agreement (PSA) with Petronas Carigali (Turkmenistan) Sdn. Bhd (the Turkmen subsidiary of Malaysia's Petronas), which will allow Petronas to expand its activities in the Turkmen sector of the Caspian Sea, Turkmen media reported.

In addition, a cooperation agreement on conducting 2D seismic works was concluded between Turkmenneft and Petronas's subsidiary, as well as a framework agreement between the Turkmen and Malaysian governments on long-term cooperation in developing Turkmen hydrocarbon resources.

The documents were signed during the visit of Malaysian Prime Minister Anwar Ibrahim to Turkmenistan on June 19.

Following the talks, Turkmen President Serdar Berdimuhamedov noted that the dynamics of bilateral cooperation will increase thanks to the start of joint work on developing offshore blocks 19 and 20 in the Turkmen sector of the Caspian Sea with Petronas's participation, as well as the conducting of 2D seismic exploration on offshore blocks 11, 12, 13 and 14.

Petronas has invested around $12 billion in the project over 30 years of work in Turkmenistan, Berdimuhamedov said. A steady increase in production has been achieved; for this purpose, five platforms were built at sea and around 40 exploration, appraisal and production wells were drilled.

Large reserves of hydrocarbon resources have been discovered as a result of the work carried out to date, Berdimuhamedov said. The development of such fields as Magtymguly, Diyarbekir and Garagol Deniz continues. In the near future, it is planned that commercial development of the Owez and Masrykow fields will begin.

Production amounts to more than 44 billion cubic meters of gas and 16 million tonnes of liquid hydrocarbons over the years of Petronas's operations in the Turkmen sector of the Caspian, Berdimuhamedov said. A gas treatment plant, an onshore gas terminal, and a workshop for assembling offshore structures have been built on the Turkmen coast.

According to media reports, offshore blocks 11-14 in the Turkmen sector of the Caspian Sea border on the northeastern side with offshore block 1, the operator of which is Petronas under a PSA signed with the Turkmen government in 1996.

In 2002, the government of Turkmenistan signed a PSA with the Danish company Maersk Oil for the development and exploration of blocks 11 and 12 with a total area of more than 5,600 sq. km. The Danish side brought Germany's Wintershall into this project as a partner in 2002, and India's ONGC Mittal Energy Ltd. (OMEL) joined in 2007.

The projected reserves of blocks 11 and 12 were estimated by experts at no less than 1 trillion cubic meters of gas and over 0.5 billion tonnes of oil. During the term of the PSA, the participants conducted two-dimensional (2D) seismic exploration (around 3,000 km) and drilled at least one exploration well, which confirmed the presence of hydrocarbons, but not in the amounts that would ensure commercial benefit. Data analysis and commercial risks led to the consortium ceasing operations in early 2010 and returning the blocks to the state.