Dragon targets 15% growth in Turkmenistan this year

Dragon Oil expects to drill eight wells by end-2011 from its newly installed Dzheitune (Lam) B platform in the Caspian Sea.

Offshore staff

ASHKABAD, Turmenistan -- Dragon Oil expects to drill eight wells by end-2011 from its newly installed Dzheitune (Lam) B platform in the Caspian Sea.

This is the second platform built and installed in the Cheleken Contract Area fields in the Turkmen sector since Dragon became operator in 2000. In an update of its activities, the company reveals plans to commission and install two further wellhead and production platforms over the next two to three years.

This year the company will use four rigs for various drilling programs, with 10 wells likely to be completed during 2010. These should lead to production growth of 15% this year (the total was 50,000 b/d at end-2009).

In January, the company also contracted Yantai Raffles Offshore for lease and management of a newbuild Super M2 jackup rig, which should be mobilized to the Cheleken fields late in 2011. On delivery, the lease/management contract will come into effect for an initial five years, extendable by a further two years.

Pending approvals, Dragon aims to drill this year a prospect west of the Cheleken Extension structure. This had been identified from 2D seismic data acquired in the early 1990s, but the prospect appears to be more pronounced following interpretation of 3D data acquired during 2004-05. If the well proves further reserves, the area will be incorporated into the full field development plan.

Work continues to commission a new 30-in. (76-cm), 40-km (24.8-mi) subsea trunkline and the Phase 2 expansion of the onshore central processing facility. Both are behind schedule, but should be completed during the second half of this year.

In the meantime, Dragon says the existing infrastructure should be able to accommodate the anticipated production growth. When the two new projects are completed, the company will be able to export gas onshore for separation and subsequent monetization.

In 2008-09, the company says that gas sales from Turkmenistan were hit by the global demand decline . However, the picture is brighter in the short term following the resumption of gas sales to Russia. Dragon also expects further progress in its discussions with the Turkmenistan government on gas pricing.

Depending on approvals and the availability of contractors in the Caspian Sea region, Dragon is aiming to spend $600-700 million on infrastructure projects during 2010-12.

02/24/2010

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