Tracer and Canneft to develop concession in Turkmenistan

Feb 12, 2002 01:00 AM

Tracer Petroleum, listed in Canada but based in Houston, said that it would cooperate with Canneft, another Houston-based company, to develop a gas-bearing concession in Turkmenistan. The two companies have signed a joint venture agreement for the Adjiyap block, located in southwest Turkmenistan.

Adjiyap is believed to hold 3-6 tcf of gas and is also home to some gas condensate reserves; its deeper strata may also hold crude oil. Canneft was awarded the right to negotiate a Production-Sharing Agreement (PSA) for the block last year. It signed a protocol on the project with Turkmenistan's state prospecting company Turkmengeologiya in March of 2001; that document called for the establishment of a 75-25 joint venture between Turkmengeologiya and Canneft.
The US company then presented its commercial offer in June of 2001, offering to make initial investments of $ 25 mm, drill 40 new wells at the block and connect Adjiyap to the Korpedje-Kord-Kuy pipeline, which ferries Turkmenistani gas to Iran.Since then, it has been negotiating a Production-Sharing Agreement (PSA).

Under its agreement with Canneft, Tracer will invest some $ 150,000 over the next five months to cover the remaining costs of finalizing the PSA. The partners will also work together to select an operator for the project since the draft PSA requires that Canneft ensure that Adjiyap remains in the hands of a technically competent operator.
Tracer's exact share in the joint venture with Canneft will depend on whether the company selected as operator acts merely as a contract operator or moves to acquire an equity stake in the field.

This is Tracer's first development project in Turkmenistan. The company was briefly involved in plans for the development of South Alibek, an oil field in Kazakhstan, but has since sought business opportunities in Iran.

Source: NewsBase
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