No. 2, 2009

Dilmurod Turdiev ,
General Director of Aral Sea Operating Company


Promising perspectives of the activities of the Aral Sea Operating Company

The Aral Sea Operating Company joint venture, one of whose founders is LUKOIL Overseas Aral Ltd., efficiently carries out the exploration of the Uzbek part of the Aral Sea and the subsequent development of the newly discovered hydrocarbon fields on terms of Production Sharing Agreement.

Well begun is half done

In September 2005, Investor Consortium Agreement was signed in Tashkent between LUKOIL Overseas Holding, Uzbekneftegaz, Korean National Oil Corporation, Chinese National Petroleum Company, and Petronas Caligari Overseas Company. In August 2006, the parties signed Production Sharing Agreement on the prospecting works with the subsequent development of oil and gas fields on the shelf and the coast of the Uzbek part of the Aral Sea. In the past few years, 8 gas condensate fields were discovered in Ustyurt region, a part of which is the PSA area, and some of these fields have been put into production. Geological surveying in the region suggest the high hydrocarbon potential of the Aral Sea. The Uzbek area of the Aral Sea is part of Ustyurt (in the opinion of some researchers, Aral-Ustyurt) region with proved commercial productivity of the Jurassic and Upper Paleozoic formations.

The investment block is a junction of different tectonic elements of North-Ustyurt Syneclise and East-Aral Depression, including the elements where gas condensate fields were discovered in the past few years. On this basis, the regularities in the geological structure and the hydrocarbon prospects can be extended from the adjacent, well-studied territories to the area where almost no drilling studies have been carried out. Clearly, geophysical data for such an area should be taken into account.

Seismic data is the focus of attention

Preliminary conclusions regarding the perspectives of the block, the geological-genetic and other prerequisites of the formation and migration of oil and gas and the formation of their commercial accumulation are generally positive. Analysis of the results of earlier geological-geophysical studies in the Uzbek part of the Aral Sea and nearby areas allows the following conclusions to be made.

The investment block has been poorly studied by seismic methods and has not been studied at all by deep drilling. Time cross-sections differ in quality, resolution, and depth of studies. Reflecting interfaces were reliably identified and located in the Mesozoic-Cenozoic and at pre-Jurassic surface; deeper Paleozoic horizons can be located only in fragments. No initial seismic data are available.

Large-scale seismic surveys, using up-to-date equipment and software for data processing and interpretation, should be carried out.

Because of the poor and irregular seismic surveying, the geological studies of the interior of the block and the identification of local hydrocarbon prospects were based on the broad use of materials of magnetometry, gravimetry, and photographic space geological mapping. This allowed the tectonics of the region and the structure and material composition of the intermediate structural stage to be characterized more reliably.

The lack of deep drilling within the block made it necessary to study in detail the available data on wells in different tectonic elements of the western and eastern sectors adjacent to the block in question.

The lithological-stratigraphic characteristics of well logs and the lithological-facies conditions of sediment accumulation during the Paleozoic and later times were examined in detail, and the region, including the territory of the block, was shown to have common geologic history during the Upper Paleozoic and Jurassic.

Encouraging results

The studies using different methods have resulted in the identification of numerous hydrocarbon prospects in the potential producing Jurassic and Upper Paleozoic deposits, thus allowing to be in existing of structures within the Contract area. Hydrocarbon traps of the structural and structural-lithological types can be expected to develop in the Jurassic formations, and traps of structural-erosion and reef types, in carbonate projections and in the inner structure of Upper Paleozoic formations, respectively.

By analogy with the examined adjacent territory, different types of collectors with better permeability and porosity and reliable impermeable beds are expected to occur here.

A complex of various indices, including the commercial productivity of adjacent areas, geological-genetic, structural-tectonic, lithological-facies, and other criteria were used to substantiate significant hydrocarbon prospects of the block. Most of indicators affirmed high possibility of existence of recoverable hydrocarbon reserves of oil equivalent.

However, different companies predict diverse commercial hydrocarbon reserves of oil equivalent at the block, the most accurate estimation will be available only after drilling of deep exploration wells.

Here, as well as all over Ustyurt region, Jurassic terrigenous and Paleozoic carbonate deposits are assumed to be the major regional exploratory prospects.

Retrospective analysis of the successfulness of hydrocarbon exploration in Ustyurt region served as the basis for determining the hydrocarbon reserve density by the stratigraphic complexes of fields known by now, the predicted number of hydrocarbon prospects and their characteristics, and for estimating the expected hydrocarbon reserves in the fields that are expected to be discovered.

The Prospecting Works Program over the Minimal (3 years) and General (5 years) Periods was prepared for the geological exploration of the Uzbek part of the Aral Sea, the search and preparation for drilling of prospect features, and the discovery of fields. The program reduces the implementation in 2007-2009 of regional, exploration and detailed CDP 2-D seismic surveys with a total drilled meterage of 2,300,000, including the regional and prospecting operations.

The optimal layout of design seismic profiles, covering all tectonic zones, and the order of their surveying were determined and detailed seismic surveys at perspective areas are planned. Additional electrical survey may be considered in the future to reduce the risk of drilling into nonproductive structures and improve the forecasting reliability of hydrocarbon prospectiveness of local features.

Drilling of two exploration wells with a maximum penetration into Upper Paleozoic deposits is planned in the Minimal Period with the aim to search for oil fields and to assess the commercial significance of oil and gas deposits of the contract area.

Value indicators of the works were determined. In accordance with the minimal obligations of Investor Consortium, these were determined to be $99.8 million for the first three years.According to the results of the first stage of geological exploration, the multi-variant technical and economical verification will be developed, with further adjustment of commercial conditions of the PSA also including the minimum program of the second stage works, the level of taxes and duties and other economical parameters.

The implementation of the Prospecting Works Program at the regional and local levels was analyzed by experts. The conclusion was made that the program implementation was highly successful and the investments in prospecting were cost-effective.The implementation of Prospecting Works Program is expected to result in the discovery of hydrocarbon fields with significant oil and gas reserves.

Moreover, developing prospecting works will contribute to the introduction of modern technologies of geophysical studies and deep drilling in Uzbekistan and facilitate the infrastructural development of the region and the creation of jobs for the local population.

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Oil of Russia, No. 2, 2009
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