South Korea plans to use floating drilling rig Doo Sung to explore for oil on the Kamchatka shelf in 2008.

For five months beginning from May 2008 the drilling rig should drill two oil-prospecting wells.

Sakhalin specialists, who are experienced in the exploration of hydrocarbons on the Sakhalin shelf, will supervise all operations on the Kamchatka shelf.

The machinery and goods for the development of the western Kamchatka shelf project will be shipped to the port of Magadan, where they will pass the customs controls, spokeswoman of the Magadan customs service Yelena Khotova said.

To accelerate the customs processing custom inspectors will work in several shifts right at the floating drilling rig Doo Sung.

The western Kamchatka shelf is as oil- and gas-bearing one as the Sakhalin shelf. The island, where five oil platforms operate, produced about 15 million tons of oil in 2007.

The development of the western Kamchatka shelf is just at the beginning. First prospecting wells should explore at what depth the oil lays and whether the oil production is profitable.

Russia, Iran hold gas talks

Gazprom Chairman Alexei Miller and Iranian Oil Minister Gholamhossein Nozari agreed to jointly develop two or three blocks of the South Pars gas field.

The two sides are looking to set up a joint energy company, alongside a third partner country, though no details of which country may participate were revealed. Further, Miller and Nozari also discussed Gazprom Neft (OTCBB:GZPFY)'s participation in oil projects in Iran.

Gazprom and Iran plan to finalize talks within the next two months.

Gazprom is already involved in the development of phases two and three of the South Pars development with a 30 percent interest, alongside France's Total (40 percent) and Malaysia's Petronas (30 percent).

The partners will invest more than $2 billion in the project and expect to achieve a production plateau of 56 million cubic meters per day of gas.

Over the near term, we see Iranian total gas production rising from 105 billion cubic meters in 2006 to 195 bcm by 2012.

With demand increasing from 105 bcm to 165 bcm over the same period, there should be some 30 bcm of export potential in 2012. Our forecasts are broadly consistent with Iranian government predictions that production could reach 200 bcm per annum by 2012.

Rosneft to invest $1B in Kamchatka

Russia's Rosneft said it plans to spend around $1 billion on the exploration of the western part of the Kamchatka shelf, which is located in Russia's Far East.

The investment will make up a small part of Rosneft's expected $24 billion costs for the project's first development stage, which was agreed by local authorities and company representatives on Feb. 19, RIA Novosti reports.

The company plans to drill two exploratory wells in 2008.

Rosneft holds a 60 percent majority in West Kamchatka Holding, the company managing the project, alongside a consortium led by Korea National Oil Corp. and also comprising GS Caltex Corp., Daewoo International, Hyundai and Kumho Petrochemical, which owns the remaining 40 percent stake in the company.

West Kamchatka Holding's wholly owned subsidiary Kamchatneftegaz is the operator of the project.

The companies involved in the Kamchatka project signed a memorandum of understanding in 2004, at which time the field's reserves were estimated at 3.7 billion barrels.

In early 2007 KNOC announced the discovery of a 10 billion barrel oil field off west Kamchatka, which lies in the Sea of Okhotsk.

The discovery could significantly increase previous reserves estimates in the area. According to KNOC, the company expects that about 40 percent (around 4 billion barrels) of the reserves will be commercially recoverable, which would be sufficient to meet South Korea's oil requirements for a decade.

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Closing oil prices, Feb. 29, 3 p.m. London

Brent crude oil: $100.54

West Texas Intermediate crude oil: $101.95

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(e-mail: energy@upi.com)