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Dubai-headquartered Dragon Oil is seeking to renew or renogotiate a decade long crude oil swap agreement with a subsidiary of the National Iranian Oil Company, which recently expired.
Since the commencement of Dragon Oil's production sharing agreement for the Cheleken area in Turkmenistan, the company has been marketing the majority of its entitlement barrels through a crude oil swap agreement with a subsidiary of the NIOC, Naftiran Company Limited. In 2009, Dragon Oil sold approximately 90% of its entitlement barrels through this marketing route. The term of the swap agreement was for 10 years and it has recently expired.
To gain further access to international markets and maintain flexibility in operations, Dragon Oil has maintained alternative routes for its crude oil, although these remain very small compared to the Iranian crude swap route. In 2009 Dragon Oil exported 10% via Baku, Azerbaijan despite achieving lower realised prices as compared to its sales through Iran.
Dragon
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A company statement says Dragon Oil is satisfied that there is sufficient capacity in its existing and other marketing routes to satisfy current production.
Dragon Oil is the operator of the Cheleken Contract Area under a production sharing agreement which became effective in May 2000.
Dragon Oil was granted a production licence for the exploration and development of the oil and gas resources in the Cheleken Contract Area for a term of 25 years. The company, during the term of the PSA, has the exclusive right to negotiate with Turkmenistan the extension of the base term of the production licence for a period of not less than 10 years.
Under the PSA terms, the oil and gas recovered is shared between the parties by reference to the level of production at a given time.
How much unconventional gas has been discovered to date?
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