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Naftogaz to begin extracting oil in the UAE

May 25, 2009

Bohdan SOKOLOVSKIY, the President of Ukraine’s Ombudsman for International Energy Security announced that NAK Naftogaz Ukrainy would likely begin drilling for oil in the United Arab Emirates by this fall. “I think that in about 2-3 months, oil will begin flowing in the Ukrainian well in the United Arab Emirates,” said Mr. SOKOLOVSKIY.

He noted that, earlier, Naftogaz Ukrainy had already begun extracting oil in Egypt, and in 2010 the volume of extracted oil is expected to reach 1 million tonnes.

On March 29, NAK Naftogaz Ukrainy, began drilling its first land-based wildcat well, Hamad-1, as part of the process of exploring and developing hydrocarbon deposits in the Al Fujairah Emirate (UAE). This project is being carried out under a Production Sharing Agreement (PSA) signed among the government of the Al Fujaira Emirate, NAK Naftogaz Ukrainy and Naftogaz Middle East L.L.C.

The planned depth of the well is 5,500 meters. The drilling is expected to produce a flow of both natural gas and gas condensate.

Brief: In July 2004, Naftogaz Ukrainy set up a joint venture called Naftogaz Middle East with the UAE company Al Jazirah Enterprise for Projects Development & Trading in order to operate in the UAE.

On January 26, 2005, a Production Sharing Agreement (PSA) was signed among the Government of Al Fujairah (UAE), NAK Naftogaz Ukrainy and Naftogaz Middle East L.L.C., which called for work to be undertaken to explore hydrocarbon deposits on the territory of the Al Fujairah Emirate and, in the event that reserves were uncovered, to develop and exploit them. According to the contract, the work of searching and extracting fuels was planned in four stages: two on land (natural gas reserves of 190bn cu m; gas condensate reserves of 87.4mn tonnes) and two on the sea shelf in the Bay of Oman (petroleum reserves of 1.7bn tonnes). At the first stage, two wildcat and four exploratory wells are expected to be installed.

On May 6, 2005, a contract to undertake an investment project and share profits was signed among NAK Naftogaz Ukrainy, TPP Al Jazaira and Naftogaz Middle East L.L.C.

In January 2006, Naftogaz began geo-exploratory work in the UAE.

The project’s main points are: 29 year contract term, including a 4-year exploratory period. Projected natural gas volumes: 47bn cu m. Projected gas condensate volumes: 14.9mn t.

The activities of the Ukrainian investor are to be on the terms and conditions established in the contract and agreement.

Tags: NAK Naftogas, oil, gas