Lukoil's Caspian oil ambitions captive to Eurasia Drilling backlog

OAO Lukoil and the Russian state’s ambitions to supercharge exploration in the Caspian Sea are captive to a backlog of orders for rigs at Eurasia Drilling Co.

“Our aim is to more aggressively develop the offshore, to kickstart the program,” Lukoil’s billionaire shareholder Leonid Fedun said in an interview with Bloomberg News in Moscow. “The level of drilling will depend on the technical abilities of Eurasia Drilling. They have rigs, but there is a line.”

Russia, dependent on oil and gas for about half its annual tax income, wants companies to tap offshore oil as the nation’s main land-based Siberian operations show their age. To encourage investment, a state commission ruled some offshore permits issued to companies like Lukoil are valid regardless of legislation in 2008 that limited rights to government-owned businesses.

While most of Russia’s offshore potential is in Arctic seas, Caspian projects that are already in development will be the first to add new barrels needed to keep output stable.

“Now there are no reservations that our exploration work can be handed to someone else,” Fedun said yesterday, June 25.

Eurasia Drilling, the dominant supplier of jackup rigs used in Caspian exploration, said in a March presentation for its 2013 results that it had a $1.2 billion offshore backlog. It has three jackup rigs at work and another is being built.

“There is certainly demand for rigs and that’s why we added a new rig at the end of last year and will deliver another at the end of this year,” Tom O’Gallagher, vice president for investor relations at Eurasia, said by phone today, June 26. “If there is a commitment to more work available, then we will certainly consider investing in another rig.”

Current exploration, using as many as eight wells in the inland sea this year, is expected to result in a significant increase in reserves at the Kuvykin deposit, Fedun said.

“We need to drill more but I can already say now that it will be hundreds of millions of barrels, mainly oil,” he said. “Our strategy without a doubt will be structured with an emphasis on the Caspian. This is priority number one.”

Lukoil, which now produces oil from the Caspian’s Korchagin deposit, began moving an upper platform to the Filanovsky field from Astrakhan shipyard yesterday, Russia’s second-biggest oil company said in a statement. The field will begin producing at the end of next year or start of 2016.

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Tullow awards EMGS $7.7 million North Sea contract

Electromagnetic Geoservices ASA (EMGS) has received a signed contract from Tullow Oil Norge AS worth $7.7 million for 3D EM data acquisition in the northern part of the North Sea.
 
"We are delighted to work with Tullow again, and also, encouraged to see contract coverage in the Norwegian waters continue to develop favorably. Adding a multitude of contracts to our multi-client activities this year should result in the most active year in Norway to date," says Roar Bekker, CEO of EMGS.
 
The survey is expected to commence in August, using the vessel BOA Thalassa.

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Lundin Petroleum sells 15% interest in PL359, offshore Norway

Lundin Petroleum AB, through its wholly-owned subsidiary Lundin Norway AS, has entered into an agreement to sell an additional 15% interest in PL359, which contains the Luno II discovery. Lundin Norway will sell a 15% interest to Wintershall Norge AS on the same terms as the PL359 transactions announced on June 17.

The Luno II discovery was made by Lundin Petroleum in 2013 and is located in PL359 in the central North Sea sector of the Norwegian Continental Shelf on the south western flank of the Utsira High approximately 15 km south of the Lundin Petroleum-operated Edvard Grieg field. An appraisal well is currently being drilled.

PL359 also contains numerous drill-ready exploration prospects and the next exploration well on the license is likely to target the stacked Luno II North and Fignon prospects, estimated to contain gross unrisked prospective resources of 46 MMboe.

Ashly Heppenstall, President and CEO, commented; “We are pleased to welcome Wintershall as a partner into PL359 containing the Luno II discovery and additional interesting prospectivity. This deal ensures the equalisation of license interests in PL359 and PL338 which includes the Edvard Grieg development project.”

Lundin Norway is the operator of PL359 and following completion of the transactions will have a 50% interest. Statoil Petroleum ASA has a 15% interest and following completion of these transactions, OMV Norge will have a 20% interest and Wintershall will have a 15% interest.

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Petrobras starts extended well testing at Iara

Petrobras started-up, on June 21, the Extended Well Test (EWT) in the evaluation area known as Iara, on block BM-S-11, some 300 km off the coast and at a water depth of approximately 2,200 m. The EWT is part of the Discovery Evaluation Program, approved by Brazil’s National Petroleum, Natural Gas and Biofuels Agency (ANP).

The test is being conducted on well 3-BRSA-1132-RJS (RJS-706), in the western section of the Iara Evaluation Plan, using FPSO Dynamic Producer. The well’s initial production of 29,000 bopd is similar to the production of the wells that are currently producing for commercial purposes in the Santos basin pre-salt, indicating the area’s potential.

This EWT, the first to be carried out in Iara, will enable the acquisition of important data for the development of this discovery, which took place in 2008.

The Evaluation Plan will expire at the end of 2014, at which time the consortium must submit the declaration of commerciality to the ANP.

Petrobras is the operator of the consortium (65%), in partnership with BG E&P Brasil Ltda (25%) and Petrogal Brasil S.A (10%).

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Ophir Energy gives upadte on Okala-1, Gabon

Ophir Energy has reported that drilling operations have now concluded on the Okala-1 well in the Mbeli Block offshore Gabon. Ophir has a 50% net operated interest.

The well was drilled by the Vantage Titanium Explorer drillship to a depth of 4,229 m MD targeting Cretaceous sands in the pre-salt section. The well encountered a thick section of Aptian salt as prognosed and well developed sandstones in the Gamba and Dentale formations.

However, there were no significant hydrocarbon shows in the target reservoirs. Ophir’s share of the Okala-1 well costs was partially covered by carries from the company’s JV partners.

The Vantage Titanium Explorer will now move to Equatorial Guinea to begin a campaign of three exploration and appraisal wells on Block R.

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