ExxonMobil to cease operations in Turkmenistan

Mar 05, 2002 01:00 AM

ExxonMobil announced that it will cease operations in Turkmenistan following an earlier announcement that it will plug and abandon its first test well in the Nakhchivan concession in Azerbaijan's offshore zone. A spokesman for the company in Turkmenistan said that ExxonMobil had reached the decision to close up shop in that country after receiving disappointing results from its first exploration well in the onshore oil field Garashsyzlyk-2.
ExxonMobil will close its offices in Ashgabat and Balkanabat but will continue to study opportunities in the country, the spokesman said on March 1.

Exxon Turkmenistan (Amudarya) Ltd (ETAL), spudded the Cheleken Deep Well, located 6 km from the Caspian shoreline, in November, with a target depth of 5,300 meters. However, the well was drilled to only 3,450 meters.
ETAL became operator of the Garashsyzlyk-2 production sharing agreement in October of 2001, when rights were transferred to it from Mobil Exploration and Producing Turkmenistan, a subsidiary of ExxonMobil. In July of 1998, Mobil signed a 25-year production-sharing agreement (PSA) with the government of Turkmenistan covering the 4,500 sq km block, which had previously been known as Zone 1. It was the first PSA signed between a US oil company and Turkmenistan. ExxonMobil stated that it had fulfilled its obligations under the agreement.

Current shareholders in the Garashsyzlyk-2 consortium include ETAL with 52.4 %; Monument Caspian Resources, a unit of Monument Resources, with 27.6 %; and Turkmenistan's state-owned Turkmenneft with 20 %. Meanwhile, it was announced in Baku on February 25 that Exxon Azerbaijan Operating Company (EAOC) would plug and abandon its Nakhchivan-1 well after failing to discover reserves in sufficient commercial quantities. EAOC is operator of the Nakhchivan concession and also a subsidiary of ExxonMobil.
Nakhchivan-1 was spudded last August with a target depth of 6,400 meters using the semi-submersible Istiqlal rig. The depth was later increased to 6,550 meters, and finally the well reached a depth of 6,746 meters, making it the deepest well ever drilled in the Caspian Sea.

A spokeswoman for ExxonMobil in Baku said that "regardless of the ultimate results, the Nakhchivan well will help us better understand the Caspian basin and plan for future drilling, for which we will use the results from the first well, including critical pressure, structural and reservoir data."
ExxonMobil is a shareholder in the 50-50 exploration, development and production-sharing agreement signed for Nakhchivan with the State Oil Company of Azerbaijan (SOCAR). According to that agreement, EAOC is obliged to drill a second exploration well; however, there is now speculation that ExxonMobil plans to pull out of the concession.
For its part, SOCAR has insisted that ExxonMobil proceed with a second well, although it may be two years before a rig becomes available. Natik Aliyev, the president of SOCAR, said that the first well indicated that crude was present in the vicinity, adding that "anegative result from the first well on the Nakhchivan block in no way means that there are not big reserves of hydrocarbons there."

The ExxonMobil spokeswoman said that the oil major is interested in maintaining a long-term presence in Azerbaijan. ExxonMobil holds shares in five offshore concessions in Azerbaijan: the Azerbaijan International Operating Company (AIOC), Araz-Alov-Sharg, Zafar-Mashal, Nakhchivan and Oguz. Last summer, the company plugged and abandoned its first exploration well in the Oguz concession and announced that it did not intend to conduct any further drilling at the concession.
The disappointing results from Nakhchivan-1 follows a series of poor test well results from offshore Azerbaijan. Italy's Agip Azerbaijan settled its account with SOCAR and withdrew from the Kyurdashi concession last year, as did France's TotalFinaElf from the Lenkorandeniz-Talyshdeniz block. Chevron also had disappointing results at its offshore Abzheron well, and BP has yet to decide on whether to resume drilling at the suspended INX-1 well in the offshore Inam field.

Source: NewsBase
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