Far East: Others

FAR EAST

Others

Reviewing several of the area’s countries with essentially no oil or gas infrastructure – in Afghanistan, wracked by Soviet invasion and internal turmoil, the Taliban, in 1998, planned to revive the Afghan National Oil Co. In the 1970s, the country produced 275 MMcfd, with reserves estimated at 5 Tcf, supplying gas to Russia’s gas grid. Most of this has been shut-in, and no exploration / development has been reported. South Korea’s KNOC reported three exploratory gas wells drilled last year, from one in 1998, likely on the offshore Gorea structure. In North Korea, several offshore PSCs have been awarded, but foreign investment is still not encouraged due to post-war U.S. sanctions.

    Nepal has no indigenous oil or gas reserves, although the government is trying to encourage exploration. It consumes only about 10,000 bopd, and oil products are imported from India. In 1998, Texana Resources won a bid to explore, and will carry out seismic surveys in the southwest and south-center of the country. Bhutan consumes about 1,000 bopd in imported oil products, but has no oil or gas production, relying heavily on mainly firewood and hydropower. And the relevant agencies report no petroleum activity or domestic production in either Sri Lanka or the Republic of Maldives. Other upstream activity in the Far East is noted below.

Malaysia-Thailand Joint Development Area (MTJDA). The triangular-shaped area, comprising three blocks, B-17, A-18 and C-19, covers 2,800 sq mi in the offshore border area between Malaysia’s Lawit-Jerneh fields and Thailand’s Bongkot field. Water depths range from 150 to 200 ft. The Malaysia-Thailand Joint Authority (MTJA) was established in 1990. Four years later, the first PSCs were signed – Block A-18 to Carigali-Triton-(and now ARCO) Operating Co. (CTOC); and Blocks B-17 to the north and C-19 to the south to Petronas Carigali-PTTEP Operating Co. (CPOC). Reserves are estimated at about 9.2 Tcf gas and more than 100 MMbbl crude / condensate.

The landmark signing of the Gas Sales Agreement (GSA) for sale of gas from Block A-18 to the Malaysia-Thailand Joint Authority was a major development last year. CTOC completed the deal with Petronas and PTT (Petroleum Authority of Thailand) on November 1; and an environmental study is now underway. Petronas will be responsible for the initial stage, with gas to be exported to Malaysia via a 34-in. pipeline to Songkhla on Thailand’s southern tip, then into a separation plant, then into Malaysia’s Peninsular Gas Utilization Infrastructure. The first contract calls for 390 MMcfd deliveries. The initial separation plant can handle 425 MMcfd. Kvaerner has the contract for the plant, to be operational late 2002. Thailand will take its 50% share of JDA gas at a later date.

Wood Mackenzie says Phase 1 development of Block A-18 will focus on the Cakerawala discovery. Development will likely include a fixed facility with 500,000-bbl condensate storage, to an offloading facility (FSO). A riser platform with compression will supplement the central processing platform (CPP). Three wellhead platforms for future development are planned. Initially, 35 development wells are envisaged. A consortium of Saipem / Technip and Samsung got an EPIC contract for the wellhead, compression and CPP platforms, plus a subsea pipeline, in-field flowlines and an FSO. Emtunga will build the quarters package for Samsung for delivery March 2001. For other fields, development of Muda, Tapi and Jengka will likely follow, in time. With four appraisals, Mudi will likely be first with a single processing platform and satellite wellhead platform.

Exploration drilling commenced in the JDA in May 1995. By the end of 1998, about 29 wildcats / appraisals had been drilled, mostly on Block A-18. No drilling was reported in 1999 due to depressed economics in the general area. No commitments were apparent by mid-2000, although movement on the Cakerwala project and the upcoming gas market outlet may spur the quest for appraisals and wildcats.

Cambodia. Wood Mackenzie reports another slow year in 1999, with no new license awards, changes or relinquishments, and no exploration drilling. The country has essentially no hydrocarbon infrastructure and no reported domestic production. Some oil / gas reserves may be likely from earlier exploration in the SW offshore area. As of Jan. 1, 2000, six contracts were known to exist in the country, although four of these are within the Overlapping Claims Area in the Gulf of Thailand.

Only two licenses are presently active. Woodside Petroleum and JV partner Cambodian Resources Co. NL’s area covers offshore Blocks V and VI in the eastern Gulf of Thailand. Woodside has completed a 5,348-km, 2-D survey. Woodside also signed an agreement in 1999 to do a 15-month geological / geophysical survey over Blocks 1, 2, 3, 4 and 7, currently all open acreage. And results of a 1998 JNOC aeromagnetic / gravity survey over onshore Tonle Sap and Mekong basins indicated an interesting deep basin west of Tonle Sap lake, over which the government would like a seismic survey.

Bangladesh. Surrounded by the NE tip of India, and the Bay of Bengal to the south, the country produces about 1,200 MMcfd gas and more than 2,000 bpd condensate from some 20 fields along its eastern border. It imports most of its 50,000-bpd oil demand. The state oil company is Petrobangla, an active operator and project participant. The major decision facing the government is whether to pursue gas export to India by pipeline from new reserves recently discovered, principally in Unocal-operated Bibiyana field.

In May 1999, Unocal and Occidental exchanged assets in Yemen and Bangladesh, giving Unocal 100% interest in Blocks 12, 13 and 14, including Jalalabad and Bibiyana fields. No new licenses were reported in 1999. In April, the first PSC under Round 2 was signed to Unocal for B 7. And negotiations were reportedly underway for PSCs with Pangaea (B 8), the Tullow / Chevron / Texaco / state-company BAPEX consortium (B 9), and Shell and Cairn (B 5 and 10).

Significant exploration wells completed to mid-2000 included: Unocal’s Bibiyana 1 and appraisal 2; Unocal’s Jalalabad 5 suspended appraisal in B 13 in deeper zones; Unocal also completed Moulavi 2 wildcat (after the No. 1 blew out in 1997) and the No. 3 appraisal, some 25 mi SSE of Bibiyana; and the operator found small shows in Kapna 1 in the NE just south of Sylhet field, 8 mi ENE of Jalalabad. Petrobangla drilled the Shalda Nadi 1 in B 9 in Suma basin. In early 2000, Unocal dryholed the Ratna 1 on B 12, 18 mi SW of Bibiyana. And Tullow used the Marine 305 jackup to drill Reju 1 in 17-m water in B 17, 16 mi west of Cox’s Bazar, with gas shows. At mid-year, Shell planned a program with the Energy Explorer IV jackup to drill Magnama 1 on B 16B in the Bay off the SE coast, plus Sandwip East 1, Sonadia 1 re-entry on B 16C, and South Sangu 1 on B 16 (spudded September 1999).

Gas sales to Petrobangla from Jalalabad started in early 1999 – it produces 100 MMcfd and 1,000 – 1,600 bpd condensate from four wells. Shell’s Sangu produces 140 MMcfd. Bibiyana holds an estimated 3.5 Tcf plus 25 MMbbl condensate. And the Moulavi Bazar discovery could add 1 Tcf. Wood Mackenzie estimates total remaining recoverable gas reserves at 14.5 Tcf. Domestic demand could grow at 6% to 2015. The key political question still unanswered – which affects exploration / development planning – is if and how to export gas to India, and how reliable this potential market could be, considering India’s growing domestic capacity. Meanwhile, little infrastructure exists for domestic electricity increase – a great deal of domestic production goes into fertilizer plants.

Japan. The U.S. EIA, in its May 2000 report, says Japan began a modest recovery in 1999 from the 1998 recession, which trimmed its large imported energy use somewhat. With the world’s second largest economy, Japan lacks significant domestic energy sources – except coal and a strong nuclear energy program. With essentially no domestic oil reserves (75 MMbbl est.) and only 13,000 bopd production, it consumed about 5.5 MMbopd in 1999, mostly from OPEC countries. And with its 1.1-Tcf gas reserves and 219-MMcfd production, about 96% of its 2.3-Tcf annual gas consumption is imported as LNG. To handle the imported crude, the downstream industry has 5-million bpd refining capacity in 38 refineries.

Japan National Oil Co. (JNOC) says nine wells were drilled last year, including two offshore; and this year’s effort is estimated to be eight wells, including one offshore. A press report in mid-1999 said Teikoku Oil discovered gas offshore Iwaki, Fukushima Prefecture, with 35-MMcfd capability. With little to look for at home, JNOC and other Japanese oil companies are involved in exploration / development elsewhere, including Saudi Arabia, the Caspian (in which activity has been increased), Kazakhstan, Brazil and at least nine other countries. EIA notes that Japan’s Arabian Oil Co. lost its drilling rights in the Saudi Arabian portion of the Neutral Zone due to February 2000 expiration, causing a major loss of equity oil.

Mongolia. Production, drilling and a small refining operation were initially handled by Russia in the 1960s, until the communist regime collapsed. First licensing started in 1991 / 1992. Mongolia presently imports its hydrocarbon products, and exports a small amount of crude to China from a remote border area. As reported here in August 1999, three companies announced awards and general plans, in early 1998, for 11 blocks – six in the SE Gobi desert area, with some existing production capability, and five in Tamtsag basin in the far NE corner, from which a small volume of crude is exported by truck, pipeline and train into China. These acquisitions involved Soco International, Gulf Canada Resources, and Mantaur Petroleum Corp. No activity reports are available for 1999. World Oil estimates five wells will be drilled this year.

Taiwan. As the U.S. EIA notes in its December 1999 report, the Chinese Petroleum Corp. (CPC), Taiwan’s national oil company, is the dominant player in all upstream / downstream activities, although competition is growing in the refining and LNG import areas under the new energy sector liberalization program – privatization of CPC itself has reportedly been delayed. There are small onshore fields and one offshore gas development. CPC said it produced 800 bopd and 81 MMcfd gas in 1999. Estimated reserves (EIA) are less than 10 MMbbl oil and 2.7 Tcf gas. Net imports in 1998 were in the 840,000 bpd oil and 510 MMcfd LNG range.

CPC said it drilled one offshore exploratory well last year, and it expects to drill six exploratory wells, one offshore, this year. Some seismic surveying was done. CPC and CNOOC (Mainland China) reportedly ratified a deal in 1998 to jointly explore an area in the Taiwan Strait, despite strained relations between the two countries.