Petronas’ Dream Contracts in Uzbekistan: Results of Long-term Planning & Engagement

As adroitly noted in Energy Daily, Malaysia’s Petronas (one of the New “Seven Sisters” which more than ten years ago was already working in Turkmenistan, another hydrocarbon rich nation that Western companies only recently began exploring) seems set to repeat its success in the one Central Asian country with immense potential that has been largely overlooked in the mad scramble of energy assets — Uzbekistan.  As the article notes:

“…On Oct. 2-4, 2005, Uzbekistan’s President Islam Karimov made a state visit to Malaysia on the invitation of King Tuanku Syed Sirajuddin. During the visit, Karimov met with the head of Petronas and discussed relations with Uzbekneftegaz and other corporations. They signed a memorandum on cooperation and an agreement on joint exploitation of oil and gas resources. Petronas subsequently signed a memorandum of cooperation with Uzbekneftegaz National Holding Co. for joint cooperation in the oil and gas sector both in Malaysia and Uzbekistan and wrote a joint study agreement with UNG for a technical study to be jointly undertaken by Petronas subsidiary Petronas Carigali Overseas and UNG in Uzbekistan’s Baisun Block…

 …The trip built on the momentum of the previous month, when Petronas Carigali Overseas joined a consortium of UNG, CNPC International Ltd., Korea National Oil Corp. and Lukoil Overseas Holding Ltd. to undertake exploration in the Uzbek territorial waters of the Aral Sea.

…Exploration of the concession over several previous years in the Ustyurt region identified eight gas and condensate fields in the contract area, with development quickly starting in the East Berdakh and Uchsay fields. Petronas Carigali Overseas received 20 percent equity in the Aral concession.…Diversifying its partners in a move that was certain to anger Washington, on May 16, 2006, Petronas, evidently unfazed by the threat of sanctions being imposed by Washington under the 1996 Iran-Libya Sanctions Act for trading with Tehran, signed a contract with Iran’s Iranian Oil Exploration Operation Co. to conduct Iran’s first ever exploration project overseas to take 2-D and 3-D seismological surveys in the Petronas oil concession blocks in Uzbekistan.

On Dec. 12 last year, Petronas’ quiet diplomacy was rewarded when its subsidiary PCOSB signed the agreement on activities and main principles for Baisun block PSA and an Exploration Agreement for the Surkhanski block with Tashkent. Both blocks are adjacent in the Surkhandarya region in southern Uzbekistan. Petronas also signed an MOC with Uzbekneftegaz.

The contract is one that Western oil companies can only dream of. Under the PSA, PCOSB will hold a 100 percent equity stake in the 1,216 square-mile Baisun concession and will be the operator for the block, while the exploration agreement for the Surkhanski Block grants PCOSB the rights to carry out exploration work in the 2,780-square-mile block, which will be followed by a PSA upon discovery of hydrocarbons…”

This entry was posted on Monday, February 11th, 2008 at 8:09 am and is filed under Malaysia, Petronas, Uzbekistan.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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Wildcats & Black Sheep is a personal interest blog dedicated to the identification and evaluation of maverick investment opportunities arising in frontier - and, what some may consider to be, “rogue” or “black sheep” - markets around the world.

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