Turkmen Caspian oil sector opens to foreign firms

ASHGABAT, Turkmenistan, Aug. 13 (UPI) -- Turkmenistan, long slow to respond to foreign efforts to enter its energy sector, is now considering tenders for development of its Caspian offshore hydrocarbon deposits.

The bids are yet another sign of the dramatic changes occurring since the death of the country's mercurial autocrat, "president for life" Saparmurat Niyazov in December 2006.

Among the companies submitting tenders are from the U.S. are Chevron, TX Oil and ConocoPhillips along with Mudabala of the United Arab Emirates, ITAR-Tass reported Friday. For companies seeking to enter the Turkmen energy market, negotiations in some cases have dragged on for years. ConocoPhillips, in conjunction with its partner Lukoil, in 2007 began discussions with the Turkmen government about developing Turkmenistan's offshore Caspian hydrocarbon blocks N19, 20, and 21.

Niyazov's successor, President Gurbanguly Berdimuhamedov told a meeting with his energy officials on Thursday, "Turkmenistan will have to choose the best option for the development of its sea shelf sections number 9 and 20" while urging energy bureaucrats to "keep strict control over and to speed up environmental impact assessment works."

The winners of the contracts will join Malaysia's Petronas, Dubai's Dragon Oil and Canada's Buried Hill in developing Turkmenistan's Caspian offshore hydrocarbon reserves, with Russia's Itera and Germany's RWE now ramping up projects in Turkmenistan's Caspian sectors 21 and 23.

According to expert estimates, Turkmenistan's Caspian hydrocarbon resources could total roughly 18 billion tons of oil. Since 1991 the Caspian basin has emerged as the world's leading untapped energy source. According to the U.S. government's Energy Information Administration, the Caspian's 143,244 square miles and attendant coastline could contain as much as 250 billion barrels of recoverable oil besides an additional 200 billion barrels of potential reserves. Additionally, the EIA places the Caspian basin's natural gas reserves at up to 9.2 trillion cubic meters of recoverable natural gas.

Given the difficulties of dealing with Niyazov's government, previous Western efforts to enter the Turkmen energy market largely focused on the country's natural gas reserves, which had begun to be developed during the Soviet era. In contrast, the Soviet Union produced less than two percent of its oil and gas from offshore sectors, all in shallow Caspian waters off Azerbaijan.

Turkmen natural gas is also promoted by boosters of the proposed Nabucco natural gas pipeline, but even if Turkmenistan can be persuaded to contribute natural gas, the seabed of the Caspian has yet to definitively be delineated amongst the sea's five riparian states. The question remains unresolved 19 years after the implosion of the USSR invalidated the 1920 and 1941 Soviet-Iranian bilateral treaties covering the issue of offshore waters. While the dispute has yet to be resolved, Turkmenistan's recent offshore ventures are in waters collectively to be assumed to be in Turkmenistan's eventual sphere of influence if and even a Caspian treaty is finally agreed between Azerbaijan, Kazakhstan, Russia, Iran and Turkmenistan.