Eight years ago, Gazprom International started drilling the deepest well in Central Asia; however, there have not been any production results yet.
In the late 00’s, a number of major oil and gas companies came to Tajikistan. Each of them was going to provide Tajikistan with its own hydrocarbons and made positive forecasts. Almost ten years past the appearance of the world-renowned oil and gas companies in the Republic, their optimism has mostly gone, and some of them left the market.
Zarubezhneftegaz, and now Gazprom International, Gazprom’s operator of foreign projects, was among those investors. Eight years ago to the day, on December 7, 2010, this company had started drilling the deepest well in the Central Asia, which had been completed in 2013; however, it brought no commercial hydrocarbons inflow. Igor Shatalov, Director of Gazprom International Representative Office in Tajikistan speaks on the current situation in this company in his interview to “AP”.
- Igor Olegovich, this summer the General Directorate for Geology under the Government of the Republic of Tajikistan stated that the company leaves Tajikistan, however you denied this information and told us that you continue exploration for “potential new plays”. What is the current situation with obtaining licenses for development of new areas?
- Gazprom implements its projects in Tajikistan according to the terms of the Agreement on the General Principles of Exploration in Tajikistan dated 10 June 2008. The meeting of the 5th Management Committee supervising the Agreement execution was held on 29 March.
The Committee decided to establish two work groups comprised of representatives from Gazprom, ministries and departments of Tajikistan: to prepare proposals, identify other projects in the Republic for collaboration and to prepare the investment agreement.
The groups should work out a proposal on the directions of further exploration in Tajikistan. Now we are in the process of agreeing upon the targets, which can be proposed for Gazprom consideration.
- It was said that Gazprom International planned to switch from the south to the north of Tajikistan. What is the reason for that, are there real hydrocarbon deposits that are worth investing an effort?
- This information does not reflect the reality. The above mentioned work group considers options to continue operations both in the south and in the north of the country. Fergana depression is one of the oldest oil production areas in CIS, which definitely has perspectives. Unfortunately, almost no exploration has been carried out there during the last 35 years. During this period, only a little scope of seismic surveys was conducted and only one Hodjabakirgan exploration well was drilled (its drilling had taken more than 10 years!). Meanwhile, there were significant advances in exploration technologies, therefore exploration of the northern territories of the Republic may result in sufficient gain in hydrocarbon reserves.
- Gazprom International has been conducting hydrocarbon exploration in Tajikistan for more than ten years. What is the total amount spent on these works?
- As of January 2017, from the start of our operation, investments in exploration amounted to more than 6 billion rubles (around 80 million dollars). These funds were used to perform the following works: 2D seismic survey (on 193.80 running km of Sargazon block) and 3D seismic survey (on 125 sq. km area of Sarykamysh field and on 214 sq. km area of Sargazon), as well as gravity survey over an area of 806 sq. km at Sargazon, Sarykamysh, Rengan. The Company drilled a superdeep Shakhrinav-1p appraisal well with total depth of 6,450 m, performed well tests, which confirmed the oil and gas presence in the exploration targets in Shakhrinav structure discovered during the drilling. Recoverable gas reserves estimated with 50 % probability amounted to 17.5 billion cub. m, with 1.574 million t of oil, and 72 million cub. m of dissolved gas.
Despite the oil and gas saturation of the Shakhrinav structure proved by drilling, the results of economic feasibility study of the geological knowledge of the areas available to Gazprom revealed that further development was commercially unviable in current macroeconomic conditions. The Company decided to return the subsoil use license.
I would like to highlight, that we had collected a huge volume of data during the exploratory works, and all this information was passed to the Geological funds of the Republic. The unique parametric information gathered during the drilling is of great importance for all companies planning to continue exploration of the promising deep-seated targets.
“Shakhrinav is the first well”
- Do you have any competitors in Tajikistan?
- In our case there is no competition: Gazprom came to Tajikistan in response to the government’s request, in order to help the Republic to solve its oil and gas independence issues. However, one should understand that Gazprom is a commercial structure, therefore its projects should be economically feasible.
- Previously you mentioned high taxation burden, are there any changes in this regard? What is the tax treatment for the Company’s operations in Tajikistan? How do similar Gazprom International representative offices operate in other countries?
- The tax treatment hasn’t changed, however the tax amount is not really the case! According to the global practice, investor companies are usually exempt from taxes at high-risk and cost-intensive exploration stage.
Statistically only one exploration well out of four discovers a field, and according to the experience of drilling in Tajikistan in the Soviet times, there it is one out of ten wells (due to very complex subsoil structure in Tajikistan). By far not every company is willing to pay quite high taxes at this stage. This problem is not new, and it is pointed out not only by us, but also by our colleagues from Тotal and СNPC.
As for other countries of Gazprom International operations, in each specific case we work in accordance with local legislation and select the format ensuring maximum economic efficiency of our projects. Works within the scope of each project associated with hydrocarbons field exploration and development, wells construction and workover, construction of infrastructure and other oil and gas facilities, are based on the agreements aimed at long-term and mutually beneficial collaboration and economic efficiency.
- Some local specialists say that the actual goal of Gazprom International in Tajikistan was not the development of oil and gas fields, but money laundering. Others connect the presence of Gazprom International in the Republic with politics. What can you say about that?
- I don’t want even to comment this statement of so called specialists, let’s leave it to them. Our countries have been connected with enduring friendship. Tajikistan belongs to the area of strategic interest for both Russia and Gazprom Group due to established neighborly relations, historical connections and geographic proximity. Gazprom acts as a strategic partner and the largest investor for Tajikistan. And the main purpose of the company, apart from commercial benefits from the project implementation, is ensuring energy and economic stability in the Republic.
- How do you estimate oil and gas perspectives of Tajikistan: how rich is the Republic with hydrocarbons, can we speak about commercial feasibility of their production?
- Over recent years we saw many thoughts around huge hydrocarbon reserves in Tajikistan. That data mentioned trillions cub. m of gas deposits. According to some claims, with its reserves Tajikistan is ahead of Qatar, one of the largest gas producers!
I can say that according to the information obtained by our geologists, today such claims have no reasonable basis. Virtually all volume of oil and gas exploration was completed in the Soviet times, and the most optimistic forecast numbers never exceeded 1 billion t of oil equivalent. And a large proportion of these prospective reserves was associated with not-explored yet deep‑seated horizons. Shakhrinav is the first well drilled in order to determine perspectives of these horizons.
The financial matter is a tough one, since the run of market changes significantly, the economic efficiency of each project should be calculated taking into account specific conditions.
There is no doubt, that the Republic has oil-and-gas bearing perspectives and we should collaborate in order to unlock this potential.