Dragon Oil, an exploration and production platform owned by the Government of Dubai, has renewed the partnership contract in Turkmenistan with the state-owned company, Turkmen Oil, until May 2025, for ten additional years with a total value of US$1 billion.
US$500 million will be paid in cash, while the remaining US$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, community development, education, public health and some benefits of the co-production.
The Cheleken complex, located in the East Caspian Sea in Turkmenistan, 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, in addition to one more potential complex, which are located around 10-40 kilometres off the coast of the Chiliken Peninsula and at water depths of 10 to 30 metres.
Over a 22-year period, the company has spent US$8.1 billion on drilling of wells and establishment of the appropriate production facilities to aid a sustainable production, with cumulative production 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 gas injection.
The company’s investments, during the contract extension period, are expected to reach another US$7-8 Billion to support expansion and development programmes, 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 2035.
Saeed Mohammed Al Tayer, MD and CEO of Dubai Electricity and Water Authority (DEWA) and Chairman of ENOC and Dragon Oil, said that the relationship between the UAE and Turkmenistan is developing with the increase in new investments. Dragon Oil, he added, has worked for nearly 20 years in the field of oil and gas exploration in the Caspian Sea.
Ali Al Jarwan, CEO of Dragon Oil, said he welcomed the signing of the contract extension agreement, which represents a constant commitment by Dragon Oil towards its profitable investments in the oil and gas sector in Turkmenistan.
“The signing of this contract also marks a milestone in Dragon Oil’s journey in a sustainable strategic growth and in its plan to expand in its operating markets, including Turkmenistan, Egypt and Iraq, by continuing to intensify exploration work, develop fields and repair wells,” Al Jarwan said adding the company aims to increase production capacity to 300 thousand barrels a day by 2026 compared to around 160 thousand barrels a day at the present time. “ This requires the development of existing assets and the acquisition of new opportunities.”
Over the past decade, Dragon Oil has evolved from a single-origin oil and gas company operating in Turkmenistan only, to a global operator and an international exploration and production platform, with production and exploration assets in Egypt, Iraq, Algeria and Afghanistan.