Oil and gas industry

Oil and gas sector plays an extremely important role in the national economy. Oil and gas constitute the foundation of the mineral resources base of Turkmenistan. Potential resources of the country are estimated as 23 billion tons of oil and 28.5 trillion m? of natural gas. Currently, hydrocarbon resources in Turkmenistan are represented by more than 130 gas fields and 30 oil fields, of which 39 and 18 are developed. The process of fields development and hydrocarbon reserves reproduction go on.

1. Current resources:

geological resources - 43.21 billion tons of conventional fuel;

recoverable resources - 28.38 billion tons of conventional fuel;

2. Explored resources:

geological resources - 6.30 billion tons of conventional fuel;

recoverable reserves - 4.77 billion tons of conventional fuel.

Hydrocarbon fields are located in two oil and gas bearing provinces (OGP). The majority (25) of the developed gas and gas-condensate fields are in the Amudarya OGP (12 in Lebap province, 11 in Mary and 2 in Akhal provinces). Nearly all developed oil, oil-and-gas, as well as gas fields are located in the South-Caspian OGP (Balkan province). These are 18 fields, of which 5 are oil fields, 9 - oil-and-gas fields (2 of which are off-shore fields in the Caspian Sea) and 4 gas fields.

The life support of a large number of people in Turkmenistan is closely linked with their work in this complex. Moreover, this complex provides to the households of the country free of charge gas, electricity and cheap fuel for the motor vehicles.

New laws and regulations have been passed to specify the safeguarding and rational use of mineral resources, environmental compatibility of product and technological processes, responsibility for environmental violations and to describe the emergency situations response actions. The main law is following:

Law "On Hydrocarbon Resources" (2008);

Equipment Market

One of the bottlenecks facing the oil and gas industry is an acute shortage of drilling and workover equipment. Available drilling equipment, which, for the most part has been in use since the 1970s and 1980s, is worn out and need to be replaced. Drills enabling work to be carried out to a depth of 6.000-7.000 meters, as well as deviated and horizontal wells are in particularly short supply. To achieve planned oil and gas production from 2001 to 2010, State Concern "Turkmennebit" and State Concern "Turkmengas" plan to drill about 1.000 development wells and another 400 exploration wells.

To stay on schedule, Turkmengas have purchased another 15 drilling rigs and 20 sets of drilling equipment to complement th 50 rigs currently in use. Inasmuch as 44 of those 50 available rigs are about to be retired, Turkmengas may find its demand dor drilling equipment much greater than anticipated.

The oil industry faces a similar situation. Over the past few years the drill count on the books of the state concern Turkmengeologiya has plummeted by half to 36 drilling drigs.

Plans to increase hydrocarbon production focus primarily on the rehabilitating idle wells through work over arrangements and modernization as well as increasing stock of equipment utilized. As much as 500-550 wells require repairs each year, according to Turkmennebit experts, which provides insight into the size of the equipment repair market. In 2000-2001, Turkmennebit and Turkmengas contracted delivery of drilling and well repair equipment with CPTDC (China Petroleum Corporation for Technology and Development), Xinjiang International Industry Co. However, given the substantial scope of workover operations, Chinese supplies may satisfy only part of the industry's demand.

Negotiations are in progress with companies from other countries. Halliburton Services, a world leader in services and equipment for the oil and gas industry, has offered its participation, as have Russia's Zarubezneft and several Ukrainian enterprises.

Other types of equipment required by Turkmenistan's oil and gas industry include:

• Equipment for geophysical field studies;

• Computer-aided systems for data processing and interpretation;

• Computet-aided telemetric systems to control drilling parameters, precision electric, acoustic, induction, radioactive and other types of logging services;

• Multi-channel drill pipes;

• Flexible coiled tubing;

• Well-completion equipment;

• Modern drill bits;

• Deep-penetration perforators.

Major forms of cooperation with foreign companies

Turkmenistan practices various forms of cooperation with foreign companies, including joint ventures (JVs), production sharing agreements (PSAs) related to oil projects, and service project cooperation agreements.

The projects are financed through direct foreign investment as well as through long- and medium-term foreign credits. Contract work performed may be compensated by gas, oil and petroleum products supplies. However, project financing - in which foreign contractors are remunerated for completed projects with production from the newly developed facilities - is preferred.

The contacts of Ministry of Oil and Gas Industry: (+993 12) 40 30 01, 40 30 44