August 22, 2012
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Home / Issue Archive / 2009 / September #9 / Russian NOCs abroad:
 Gazprom in Libya

№ 9 (September 2009)

Russian NOCs abroad:
 Gazprom in Libya

Russian companies are increasingly making an impact on Africa’s oil and gas scene, particularly in North Africa and Nigeria. With Gazprom undertaking an aggressive exploration campaign in Libya.

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Oil & Gas Eurasia conducted an interview with Gazprom’s press service on behalf of Petroleum Africa which printed the interview in English in its September issue.
Oil&Gas Eurasia: Has the economic crisis had an impact on Gazprom’s operations in Libya?
Gazprom: Evidently, recession on the global market impacts every global business, Gazprom is no exception. At the same time, prior to the crisis Gazprom did take some pre-emptive action, which ensured our present adaptation to a changed market environment, provided sufficient cash-flow for financing the key projects, and boosted efficiency and earning ratio of the core business directions. Also, since we make conservative long-term forecasts for natural gas demand on the key markets, our strategic goals and projects, including these located in Libya, are resistant to the crisis.

OGE: What are the advantages of working in Libya compared to other African states?
Gazprom: Certainly, being a global energy company, Gazprom does consider options for joining oil and gas projects in Africa. The company has its largest business presence in such countries as Algeria, Libya, and Nigeria. From our point of view, business expansion in each of the named states has certain advantages. Gazprom is ready for constructive dialogue and effective cooperation with all African partners.
About Libya – the country is highly attractive from an upstream development point of view as it has a large resource base, low cost of oil production, closeness to European markets, and well-developed infrastructure.

OGE: Has Gazprom swapped assets with ENI, has the company received any assets in this deal?
Gazprom: Gazprom and ENI are in talks on the issue, the deal will be closed shortly.

OGE: Have you completed processing and interpretation of seismic data collected on Libya’s licensed sites No. 64 and No. 19 in 2008 and 2009?
Gazprom: In the exploration work on Libya-based licensed sites, Gazprom Libya uses the latest globally-accepted seismic prospecting technologies. In December 2008 the seismic ship GeoChallenger owned by CGGVeritas successfully completed the 3D seismic exploration at the offshore site 19. The project required exploration of over 5,000 sq km.
On the licensed site No. 64 (onshore, Ghadames basin), WesternGeco company used VIVID 3D Sparse Q-Land technology for seismic prospecting, processing 3,405 sq km of data with reduction range of 25 and some 890 sq km of data with reduction range of 50.
Currently CGGVeritas and WesternGeco processing centers in Tripoli are finishing the processing of 3D seismic data received in field-based seismic operations. Also, our interpretative center Gazprom Libya B.V. has completed fundamental work on collection and compilation of regional geologic and geophysical information (creation of the regional geological database), constructing geologic and tectonic models for the large part of Pelagian basin, analysis of the properties and specific features of the hydrocarbon system for the site No. 19. Acquired results have been handed over to Beicip Franlab for the basin modelling stage. Similar work on constructing geologic and tectonic model of the large (over 80,000 sq km) part of the Ghadames basin is being done for the licensed site No. 64.
By the end of the year the company shall complete processing and interpretation of seismic data on the sites 19 and 64 (PreSTM interpretation of 3D cube/PreSDM 3D processing, PreSDM interactive analysis and interpretation of 3D cube), which will be used to select preferred drilling locations.

OGE: Has the drilling tender for site 64 been closed? Which company placed the winning bid?
Gazprom: No final decision has been made so far.

OGE: Drilling of the offshore wells at the site No. 19 has been pencilled for early 2010 – has Gazprom’s program for exploration of the onshore site No. 64 been planned for the same period?
Gazprom: Drilling at both licensing sites will commence summer 2010.

OGE: What specific challenges does Gazprom Libya face now on the two blocks? What are the short-term plans?
Gazprom: The multicultural team of Libya’s office of Gazprom Libya B.V. – some 40 people, working as a single unit with Gazprom’s Moscow-based experts, successfully solves the tasks linked to operation of Gazprom projects in Libya.
Currently we’re preparing for the drilling stage, which is planned for both licensing sites, as has been said, for summer 2010. We have inked a lease contract for a semi-submersible rig which will be drilling at the offshore site No. 19, and are completing selection of the drilling contractor for the site No. 64 onshore. Contracts on supplying well casing and wellhead equipment have already been signed.
The company has also selected contractors for offshore work, which includes supplying auxiliary ships for rig maintenance, helicopter support, logistics base for reception and storage of materials and equipment, etc. We have also launched tenders on provision of services related to exploration drilling (drilling solution service, geophysics, telemetry, well packing, etc.)

OGE: What is the preliminary estimated potential of Site 64? What are the anticipated reserves of Site 19?
Gazprom: The total reserves of Site 64 are estimated at 20 million tons of oil. The share of the Gazprom Group is 9.8%. The total reserves of Site 19 has reached some 300 Bcm of natural gas; here Gazprom Group’s share is 10%.
It should be noted that this estimate was calculated prior to massive seismic exploration work on the licensed sites. The preliminary results of processing and interpretation of the seismic data provide an optimistic viewpoint on their real potential. We hope that successful exploration drilling will confirm our estimates.

OGE: Does Gazprom plan to initiate social assistance programs in Libya? If yes, which?
Gazprom: The companies of Gazprom Group always join different social programs and charitable contributions in regions of operation. In particular, Gazprom Libya provides regular sponsorship help to a number of orphanages in Tripoli. The company is also one of the sponsors of Libya’s Folklore Art Festival. Considering the local traditions, the company regularly joins the actions during Islamic holidays by local charitable funds on supporting the needy families. Gazprom Libya receives many acknowledgements of gratitude, including those from the local authorities and from Libya’s National Oil Corporation (NOC).

OGE: What is the status of plans for a joint venture with NOC for the modernization of the existing and installation of new refining facilities? Are there plans for a new Gazprom-assisted project on a gas-transportation system?
Gazprom: Gazprom and NOC continue searching for mutually beneficial projects in Libya within the agreements reached during the last year’s visit of Gazprom head Alexei Miller to Tripoli.
According to the Memorandum signed at the time between Gazprom and NOC, the two sides are studying options for implementing joint projects on exploration and development of gas and oil fields in Libya – gas processing, installation of new facilities for gas liquefaction and oil refining, design and installation of power engineering facilities working on natural gas, and cooperation in other fields of energy segment.

OGE: How is the work is going on oil concessions С96 and С97 (As Sarah field and others), where Gazprom holds a share?
Gazprom: Geologic exploration work goes on; we also implement the measures on reducing the production drop rate for the concession C96 while ensuring a production boost for concession C97.
In June 2009, 66 wells were operating on the C96 and C97 concessions, producing a month’s total of 2.701 million barrels of oil and 72.89 Mmcm of natural gas.

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