Canadian Junior Eyes Uzbek Gas Fields: Update
(adds comments by Condor CEO at end)
Condor Petroleum, a Calgary-based junior oil and gas producer working in Kazakhstan and Turkey, has entered into talks with Uzbekistan on the development of five gas fields.
In its third-quarter results published on November 13, Condor revealed it had signed a heads of agreement the previous day with the Uzbek energy ministry giving it a 120-day window to negotiate a production-sharing agreement (PSA). The PSA covers five producing gas fields and associated gathering pipelines and gas treatment infrastructure. Condor will also secure the right to explore and develop areas surrounding the fields.
We are excited about the potential investment opportunity in Uzbekistan,” Condor CEO Don Streu said. “The country has been undergoing significant economic, legal, tax and social reforms under the guidance of President Shavkat Mirziyoyev and is ranked by the World Bank as one of the 20 economies where business climates have improved the most over the past year.”
Uzbekistan is among the leading gas producers in the former Soviet region, extracting 56.6bn m3 last year according to BP. It exports some of this gas to Russia, China and its Central Asian neighbours.
“We firmly believe that our vast regional experience, application of new technologies and innovations can be successfully deployed in Uzbekistan to significantly increase existing field production,” Streu said.
Fiscal and operating terms, including royalty rates, cost recovery, profit splits, gas marketing and pricing, governance and committee structures and acquisition payments for immoveable property in the fields, are expected to be set out in the PSA.
Condor’s net loss from operations narrowed to $2.93mn in the three months ending September 30, versus $4.65mn a year earlier. But gas and condensate sales revenues almost halved to $1.1mn from $2.17mn because of lower output in Turkey.
Condor also produces oil in Kazakhstan, but it looking to downsize its operations. It has been locked in a legal dispute with Kazakh authorities for several years over the renewal of its exploration contract or the Zharkamys block. And in September it agreed to sell production rights to two oilfields at the site, Shoba and Taskuduk, to an unidentified international company for $24.6mn – a deal it expects to close in the first quarter of 2020.
“We anticipate our license extension for the Zharkamys exploration in Kazakhstan to be completed this year, allowing for exploration activities to recommence in 2020,” Streu told NGW. He added that details on the Uzbek fields, including their location and production levels, would be announced once the PSA has been finalised.