Dragon Oil and Turkmen Oil Agree To Extend Partnership

/ Financial News / Tuesday, 05 July 2022 11:58

Dragon Oil, an exploration and production platform owned by the Government of Dubai (ENOC), has renewed the partnership contract with Turkmenistan’s Turkmen Oil, beginning May 2025, for a period of ten additional years, with a total value of $1 billion, the state news agency WAM has reported.

As per the deal, $500 million will be paid in cash, while the remaining $500 million will be paid over the next 13 years, which includes the company's commitment towards the support of the Turkmen government's projects in community development, education and public health, as well as some benefits of the co-production.

The agreement was signed at the Turkmen capital, Ashgabat, with the presence of Engineer Ali Al Jarwan, CEO of Dragon Oil, and several of the company's executives.

Engineer Ali Al Jarwan, CEO of Dragon Oil and Turkmen Oil executives during the signing ceremony

The Cheleken complex, located in the East Caspian Sea in Turkmenistan waters, is the main producing asset of Dragon Oil, and consists of two major offshore oil and gas fields, Lam and Zhdanov, which have been successfully developed and maintained since 2000. Additionally, another potential complex is located between 10 and 40 kilometers off the coast of the Chiliken Peninsula and at water depths of 10 to 30 meters.

Over 22 years, Dragon Oil has spent $8.1 billion on well drilling and setup of appropriate production facilities to aid in sustainable production, with a cumulative retrieval of 437 million barrels of crude oil.

Since 2018, Dragon Oil has shifted production from natural depletion of conventional oil to production supported by water injection, artificial lifting and, more recently, gas injection.

The company’s investments during the contract extension period are expected to reach another $7-8 billion to support expansion and development programs. While future production levels would range between 60-70 thousand barrels per day, the cumulative production of crude oil is expected to reach 350 million barrels until the year 2035.

Meanwhile, Ali Al Jarwan, CEO of Dragon Oil, stated, "The signing of this contract also marks a milestone in Dragon Oil's journey in a sustainable strategic growth and within the plan to complete growth and expansion in its operating markets, including Turkmenistan, Egypt and Iraq, by continuing to intensify exploration work, develop fields and repair wells, to increase production capacity to 300 thousand barrels per day by 2026 compared to around 160 thousand barrels per day at the present time, according to its strategies and ambitions, which requires the development of existing assets and the acquisition of new opportunities."

Saeed Mohammed Al Tayer, MD and CEO of Dubai Electricity and Water Authority (DEWA) and Chairman of ENOC and Dragon Oil has said that the extension of the contract confirms the company’s solid commitment to strengthening its presence in Turkmenistan, emphasizing that the company aspires to support the current expansion plans while continuing to work during the forthcoming period to launch several sustainable explorations within this promising market, creating long-term benefit for all.

Dragon Oil boasts international exploration and production assets in Egypt, Iraq, Algeria and Afghanistan.

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