CAPITAL: Ashgabat

MONETARY UNIT: Manat

REFINING CAPACITY: 236,970 b/cd

OIL PRODUCTION: 123,000 b/d

OIL RESERVES: 546 million bbl

GAS RESERVES: 101 tcf

A group led by Amoco Corp. planned to develop a $2.4 billion, 750-mile pipeline project to transport natural gas from Turkmenistan to Turkey and Europe.

Construction time was put at 3 years.

The group consisted of Amoco and a new pipeline joint venture owned by affiliates of GE Capital and Bechtel Enterprises.

The project`s TransCaspian Gas Pipeline System would involve engineering, design, procurement, and construction of a gas export pipeline from a point near Turkmenbashi in western Turkmenistan extending across the Caspian Sea basin to landfall near Baku in Azerbaijan. From there, it would extend across Azerbaijan and Georgia to Erzurum in Turkey, where it would link with the main Turkish gas grid.

Initial gas supply for the line was to originate in eastern Turkmenistan. Consortium officials expected, however, that capacity in the TransCaspian pipeline could also be made available to suppliers of additional gas.

Initial capacity would be about 350 bcf/year, expandable to 1.225 tcf/year.

The pipeline project was conceived initially in 1997 by Bechtel.

Working with Turkish national oil and gas pipeline company Botas, Bechtel completed technical and economic feasibility studies for the project.

In other transportation action:

- Turkmenistan and Iran started up a $190 million pipeline late in 1997.

The 200-km pipeline moved gas from Korpedzhe field in southern Turkmenistan to the northern Iranian gas grid at Kord Kuy, offsetting deliveries from gas fields 1,500 km away in southern Iran.

Capacity of the 4 billion cu m/year line was expected to be doubled by 2006. Iran financed 80% of the project and signed a 25-year supply contract.

The government hoped Iran would become the route for several pipelines to move Caspian oil and gas to world markets-despite staunch U.S. opposition.

The producing nations around the Caspian Sea were receptive to using Iran if it would lessen their dependence on Russia`s pipelines and tanker terminals.

Turkmenistan alone has about 21 trillion cu m of gas reserves.

- The U.S. Export-Import Bank approved a $96 million long-term loan guarantee for the sale of gas compression equipment and related engineering services for a gas pipeline upgrade project in Turkmenistan.

Bateman Engineering Inc., Denver, would supply the engineering services. Dresser Rand Co., Corning, N.Y., and General Electric Co., Schenectady, N.Y., were to provide compressors and power turbines.

The pipeline upgrade would allow Turkmenistan to transport and sell natural gas abroad, increasing the country`s gas export earnings. It was the first time Ex-Im Bank had financed a petroleum project in Turkmenistan.

Total cost of the project was $180 million. Export credit agencies from Israel and Czech Republic also were to provide financing. The borrower was the State Bank for Foreign Economic Affairs of Turkmenistan.

Upstream

A joint venture of Monument Oil & Gas plc, London, and Mobil Oil Corp. expected in April 1998 to secure a contract that would give the companies a major stake in Turkmenistan`s onshore oil production.

The agreement, for which the Monument-Mobil combine gained exclusive negotiating rights in November 1996, covered incremental production from unallocated fields north and south of the Nebitdag contract area of the South Caspian basin.

MONument-Mobil secured the Nebitdag license in mid-1996 and was working to boost production in Burun and Gizilgum fields and to evaluate exploration potential of the license area.

MONument said the Nebitdag area of western Turkmenistan covers a 2,000 sq km area of the Absheron trend. The prolific play runs roughly northwest to southeast across the lower part of the Caspian Sea.

The independent said its first objective was redevelopment of Burun field, which was producing 6,500 b/d of oil from 61 wells out of 220 drilled at the time it took over operatorship.

An initial workover program on eight wells had increased production capacity by 8,000 b/d. Further workovers were expected to raise production to 20,000 b/d of oil from Burun by year-end 1998.

The venture exported its first cargo in March 1998 through an oil swap arrangement with National Iranian Oil Co. Monument was acquiring 3D seismic data to prove the full extent of Burun.

MONument`s redevelopment was expected to prove up incremental reserves of 507 million bbl in Burun, and to lead to a production plateau of 100,000 b/d during 2002-05.

Burun redevelopment was to have three phases.

Phase 1, under way in 1998, included a pilot water-injection program, along with maintenance of local oil pipelines and upgrading of the jetty and tanker-loading facilities at the port of Cheleken. Production after Phase 1 could reach 50,000 b/d, said Wood Mackenzie of Edinburgh, Scotland.

Phase 2 was to involve construction of additional field and power-generation facilities, plus start of water injection and artificial lift operations and expansion of jetty and tanker-loading facilities. Burun output after this phase was expected to be 50,000-100,000 b/d.

Phase 3 was to include exploration, appraisal, and development of prospects in the Nebitdag area. There were also plans to upgrade the gas infrastructure and to build an oil export pipeline to Iran or join up to the planned Trans-Caspian pipeline.

MONument worked with Mobil and state firm Turkmenneft to conclude a formal agreement with the government enabling it to build on progress in developing Burun and exploring in the Nebitdag area.

Wood Mackenzie estimated total remaining reserves in the onshore South Caspian basin at 1.1 billion bbl.

"Turkmenistan`s oil production could rise to 280,000 b/d by the middle of the next decade if the entire area is assigned to foreign oil companies and significant investment is channeled into the sector," it said.