CanArgo signs production-sharing agreement with Saknavtobi
Canada's CanArgo Energy announced that it had finalized a production-sharing agreement (PSA) with Saknavtobi,
Georgia's state oil company for the exploration and development of two onshore oil fields. The contract states that
CanArgo's fully-owned subsidiary CanArgo Norio must collect a certain amount of seismic data for the two fields and
begin well drilling operations within one year of the date of the agreement's ratification. CanArgo Norio has already
acquired enough seismic data from the area to fulfil the first condition.
The PSA covers a 1,542-sq km area that includes the Norio and Northern Kumisi blocks in eastern Georgia. The concession is located to the north of the Georgian capital Tbilisi and is adjacent to the Ninotsminda oil field, which is also being developed by CanArgo.
Norio, also known as Block XIc, is known to contain at least two oil-bearing sections, Norio and Satskenisi. The extent of the block's reserves is not yet known, and CanArgo recently conducted a seismic survey of the area in order to make a more accurate assessment of Norio's potential and determine locations for test drilling. Norio is considered to be an attractive prospect since oil has been found at two fields to the south -- Ninotsminda and Samgori.
The Northern Kumisi block, meanwhile, is expected to contain mostly natural gas rather than crude oil. CanArgo is already developing the Kumisi property and believes that Northern Kumisi may be an extension of the gas prospects at Kumisi, where drilling work is due to begin next year.
CanArgo holds the rights to several other oil- and gas-bearing properties in Georgia and has also expressed interest in downstream (refining and gasoline retailing) projects in that country. The Canadian company appears to be interested in Azerbaijan as well. CanArgo and Saknavtobi have signed a memorandum to mark their agreement to work together to investigate Azerbaijani oil and gas investment prospects.