Far East: Others

FAR EAST

Tony Sitathan, Contributing Editor, Singapore (Indonesia, Malaysia, Thailand, Viet Nam, Myanmar, Brunei, Cambodia and MTJDA)

Others

Oil / gas development in Afghanistan remains questionable due to Soviet withdrawal in 1989 and damage / sabotage during civil unrest. Angot field, with reported 27 MMbbl reserves is producing about 500 bopd. Refined products are imported by various provinces. Gas redevelopment is progressing after mid-1970 production of 275 MMcfd, 80% exported to the FSU. The Taliban government is studying seven gas fields and six oil fields and has exploited three gas fields and laid pipelines to supply surrounding areas. Talks continue on using the country as a potential transit route for major export lines from Central Asia south and east. International recognition of the new government is said to be needed for proposals to continue.

South Korea has one small 200-Bcf offshore gas project, Tonghae 1, off the SE coast, expected to supply only 2% domestic gas demand, once onstream. It is a major oil/LNG importer. KNOC is pursuing international equity stakes in exploration with 19 projects in 12 countries, plus possible joint offshore E&D with North Korea. Little activity has been reported in North Korea, despite award of several offshore PSCs. Foreign investment has not been forthcoming due to political considerations.

Nepal has no indigenous oil / gas reserves or production. Its primary energy source is hydroelectric power and some coal. It imports 12,000 bpd refined products. No results have been reported on a 1998 seismic exploration license to Texana Resources. Bhutan has no oil or gas production and imports 1,000 bpd oil products. Its primary energy source is hydroelectric, with ample resources. Local areas still rely on firewood until rural electrification proceeds. Sri Lanka has no oil or gas, importing 70,000 bopd. Its Ceylon Petroleum Corp. (CPC) was reportedly planning a satellite survey of its offshore territory and possible PSCs with prospective investors. Early seismic had indicated possible structures. Agencies from the Republic of Maldives and Laos reported no oil / gas activity and no hydrocarbon resources for their countries.

Malaysia-Thailand Joint Development Area (MTJDA). One of the most active areas in Malaysia for gas exploration and development is the MTJDA, located in the lower part of the Gulf of Thailand and governed by the Malaysia-Thailand Joint Authority (MTJA). There is no production at present. Reserves are estimated at 65.0 MMbbl crude / condensate and 6 Tcf gas.

MTJDA covers Blocks A-18, B-17 and C-19. To develop Block A-18, a 50-50 partnership between Petronas and Triton Energy was formed under the Carigali-Triton Operating Co. (CTOC). The CTOC signed a gas sales agreement with PTT and Petronas. Gas production is expected to begin in mid-2002, at 390 MMcfd, with initial development focusing on the Cakerawala discovery.

PTT and Petronas, operating as CPOC, share equal interests in the remaining two other blocks. There was an earlier agreement for PTT and Petronas to develop a gas pipeline from the MTJDA to a processing plant in Songkla, Thailand, and a pipeline linking both the Thai and Malaysian gas grids, as was described in more detail in this report in August 2000.

However, since the proposal was first made public to build a processing plant in Songkla, local residents have protested and the final outcome has yet to be decided.

Cambodia. A group led by Woodside Petroleum, Cambodian Resources Co., Unocal and a private investment firm, Jasopt, intends to obtain PSCs from the Cambodian National Petroleum Authority (CNPA). So far, the offshore blocks are I, II, III and IV in the eastern side of the Gulf of Thailand. Based on existing data from CNPA, these fields have reserves up to 3 Tcf. However, according to CNPA, these offshore blocks are not exclusively reserved for the Woodside consortium – Mitsui, Anadarko and Chevron are also keen on the blocks.

Harrods Energy intends to conduct seismic studies on Cambodia’s onshore acreage near Tonle Sap, including Parsat and Kampong Chhnang. However, due to ecological sensitivities of the Tonle Sap area, several environmental groups including the Ministry of Environment have some reservations, and environmental studies were called for before any formal offers are to be accepted by the Cambodian government.

There were no resolutions seen in the dispute between Thailand and Cambodia in the overlapping claim area (OCA) in the Gulf of Thailand. Since the conditional petroleum arrangements were signed four years ago between the Cambodian government and Conoco, Enterprise, BHP, Idemitsu and Inpex, no exploration work has so far been carried out. The OCA is estimated to contain around 11 Tcf gas. So far, there are seven licensed areas in the OCA. However, no infrastructure has been in place by the Cambodian government to take any real advantage of any oil / gas exploration or discoveries.

Woodside Petroleum and its JV partner Cambodian Resources Co. are still active in conducting seismic surveys in offshore Blocks V and VI in the eastern Gulf of Thailand.

Bangladesh. The Ministry of Energy and Mineral Resources has overall responsibility for the energy sector. The state oil company Petrobangla is responsible for oil / gas exploration / production / distribution – it has 10 operating companies. Foreign company involvement includes: Cairn, ExxonMobil, Occidental, Rexwood-Okland, Shell, Texaco and Unocal. The country has a small crude / condensate reserve of 54 MM bbl and produces about 3,000 bpd oil, mostly condensate. Net oil imports in 2000 were over 58,000 bpd. Some 10 active fields along the eastern border produce about 1,000 MMcfd gas and 2,000 bpd condensate. Gas reserves, and what to do with them, are two big questions. Estimates range from the government’s 13 – 15 Tcf, to outside (U.S. Geological Survey) guesses up to 33 Tcf. Talk is still ongoing about possible exports to India, but growing domestic needs – only 18% of the population is connected to the electricity grid – likely make internal development more practical.

The government is courting outside investment, but is moving slowly. After several years, Unocal was awarded the first PSC for Block 7 in April 2000, under 1997’s Round 2 licensing. Tullow got the second PSC from Round 2 in April 2001 for onshore Block 9 in the Bengal basin, three wells in three years are called for. Plans for opening a 3rd round were reported last year, but not taken seriously. PSC licenses for Shell / Cairn on Blocks 5 & 10, and for Maersk Oil on Blocks 19 & 20 were expected to be signed, but had not been announced through early 2001.

Notable exploration well completions through April 2001 include Shell’s South Sangu-1 wildcat, which found gas but had downhole problems. The well is 3 mi SE of Sangu field in Block 16, the first offshore producing field in the country, in 25-ft water in the Bay of Bengal. Shell retained the Energy Explorer IV jackup and drilled Sandip East 1 in Block 15, 35 mi N of Sangu, which was P&A’d as subcommercial gas. In mid-2001, Shell had moved onto appraisal South-Sangu-2 and was expected to move later to the Magnama prospect in offshore Block 16B, and possibly re-enter and deepen Sonadia-1 in 16C.

Overall, the country drills between 50 and 60 exploration wells a year. EIA reported in February that Shell, Texaco, Cairn, Holland Sea Search, Unocal, Rexwood-Okland and UMC Bangladesh were active in exploration under six PSCs with Petrobangla.

Gas development and reserves addition drive development activity. Petrobangla has some 20 gas fields in the eastern half of the country, half of which are active. The main fields are Bibiyana with 5 – 6 Tcf; Titas (4.1 Tcf); Habiganj (3.7 Tcf); Kailashtilla (3.7 Tcf); Rashidpur (2.2 Tcf); Jalababad (1.5 Tcf); and offshore Sangu (1.0 Tcf). Petrobangla’s subsidiaries Sylhet Gas Fields and Bangladesh Gas Fields produce gas for domestic use.

Shell and Unocal are active in gas E&D. A project is proposed to develop Shahbazpur gas field in Bhola, with a 93-mi pipeline to Khulna and several gas fired power plants; Unocal could be involved. The company is also involved in developing Jalalabad.

To increase overall electricity output and move power to the west, which has virtually no field developments, several plants are being solicited, including fast-track barge-mounted plants, plus gas-fired plants at Haripur, Meghnaghat and Baghabari. The goal is "achieving universal electrification by 2020."

Japan. The U.S. EIA’s April 2001 review of Japan says its economic recovery from the recession of 1998 is stalling, leading to downstream consolidations and upstream cost cutting. In November 2000, a major restructuring of the Japan National Oil Corp. (JNOC) liquidated 13 oil / gas exploration companies. With minimal hydrocarbon reserves and the world’s second largest energy imports, JNOC actively seeks equity in international developments, pursuing a policy of purchasing stakes in proven oil fields, rather than exploration. The company says it drilled 12 wells in 2000, with 9 exploration wells, one offshore. It plans 17 this year, with 10 wildcats, including two offshore.

With crude reserves in the 70-MMbbl range, and average production of 13,000 bpd from 140 wells, the country imports 5.5 MMbopd, primarily from OPEC countries. In early 2001, Japan had 5.0-MMbpd refining capacity at 35 refineries. And the country actively maintains a strong nuclear reactor power capacity, with 51 units in operation, the world’s third largest, behind the U.S. and France. The government also subsidizes a minimal coal development to supplement major steam-coal imports.

In early 2000, Japan’s Arabian Oil Co. (AOC) lost its rights to its portion of the Saudi Arabian share of the Neutral Zone and its 280,000 bpd output. Saudi Aramco took over operation of former AOC fields, but AOC continues to operate assets in the Kuwaiti portion. Japan is compensating by increasing its investment in Iran, which is negotiating with Japex and Indonesia Petroleum (Inpex), both majority owned by JNOC, for development of onshore Azadegan field, with 6 Bbbl reserves. Japan is also seeking equity in the Caspian Sea, including stakes in Kur Dashi and Atashgyakh-Mugandeniz-Yanan Tava, and a significant 7% in the big Kashagan development.

Gas reserves in the 1.1 Tcf range allow production of some 200 MMcfd from an estimated 440 wells, including seven offshore. Some 97% of Japan’s gas needs are imported – all as LNG, and most from SE Asia. Future sources are Malaysia’s Tiga project and Australia’s NW Shelf LNG. And imports from Sakahlin – by either pipeline or LNG, as backed by ExxonMobil and Shell, respectively – are being considered.

Taiwan. Chinese Petroleum Corp. (CPC), the national oil company, is the dominant player in all upstream / downstream sectors of the petroleum industry. Formosa Petrochemical Group opened a competitive refinery in 2000, creating surplus refining capacity. Electric power generation is dominated by state-owned Taiwan Power Co. (Taipower), which operates 70 plants, including 18% nuclear. A new policy is shifting emphasis from nuclear to LNG, despite ongoing construction of a major nuclear plant at Kungliao, in which Taipower has already invested $2 billion.

CPC says it produced 735 bopd crude / condensate and 82 MMcfd gas in 2000 from 69 onshore wells. Estimated reserves (EIA) are 4 MMbbl oil and 2.7 Tcf gas. Net oil and gas imports in 1999 were 806,000 bopd and 512 MMcfd of LNG. The country drilled three onshore dry holes in 2000 and expects to drill four onshore and one offshore exploration wells this year. CPC and mainland China’s CNOOC signed a deal in 1996 to jointly explore a 5,900-mi² area in the Tainan basin of the Taiwan Strait. The first round of seismic surveys by the two companies was completed in October 1999, reportedly identifying several worthy structures.

Mongolia. Historically, 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 under the Petroleum Authority of Mongolia. Earlier reviews noted that three companies announced awards in 1998 for 11 blocks, six in the SE Gobi desert, with some existing production capacity, and five in Tamstsag 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.

Soco reports the drilling of four wells on Contract Area 19 during 2000, three discoveries with 19-9, 10 and 12 and a dry hole on 19-11. Well 19-10 tested a new structure north of 1997’s 19-3 discovery. Soco works with Huabei Oilfield Services of China, which provides drilling services and can elect to participate in Area 19 after the second four-well drilling program is completed this year on Area 19-13 and 21; 2-D/3-D seismic has been conducted over Areas 21/22 in preparation for this drilling. Petrovietnam holds 5% in each of Soco’s PSCs. Area 20 (1997) was relinquished after drilling one well. Soco’s net production to its working interest in early 2001 was 9,450 bopd. Some crude is trucked to a pipeline at Aershan field for delivery to the Horhot Refinery in the Inner Autonomous Region of China. Information on other Mongolian operations is not available.