Frontera signs PSC with Georgia '

Jul 14, 1997 02:00 AM

June 26, 1997 Houston-based Frontera Resources Corporation has signed a production sharing contract with Georgian State Oil Company Saknavtobi for 1.4 million acres of land in the country's oil-prone Kura Basin. The contract also grants Frontera the exclusive right to construct a petroleum refinery near Tbilisi, Georgia's capital. With this transaction, Frontera becomes the first US oil and gas company to invest in oil and gas rights in Georgia.
Frontera's production sharing contract covers Block 12 in eastern Georgia. The block is along the country's border with Azerbaijan, and on the route of the early oil pipeline that the Azerbaijan International Oil Company is building from the Caspian Sea to the Black Sea.
The contract was formally executed on June 25 in Tbilisi by Georgian Minister of Fuel and Energy David Zubitashvili and by Revaz Tevzadze, president of Saknavtobi. "Under President Shevardnadze's leadership, the nation has achieved a measure of economic stability and commitment to private enterprise that is at the forefront of the world's new democracies," stated Steve C. Nicandros, president and CEO of Frontera. "This favourable business environment gives Frontera confidence in the future of its Georgian operations."
Block 12 contains two oil fields with known rehabilitation possibilities, and three other fields that require further study. The existing fields, one of which was discovered as recently as 1963, contain light sweet crude. Significant numbers of undrilled generic structures exist in the block.
"We have already assembled and analysed a substantial amount of data on Block 12," said Reg Spiller, Frontera's vice president of exploration and production. "Close co-operation with the skilled professionals at Saknavtobi and application of leading-edge technology will permit us to determine whether the block holds significant undeveloped hydrocarbon reserves. If our geologic, geophysical and engineering work continues to show promise, we expect that advanced exploration and production techniques will prove the key to successfully increasing Georgia's oil production."
Frontera, working closely with experienced specialists at Saknavtobi, will pursue a two-track work plan intended to spur early cash flow through rehabilitation of older fields while ascertaining the potential for discovery of new reserves. Frontera will also commence an integrated refinery market study and technical analysis, with the exclusive right to construct a refinery according to the outcome of the study.

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