The Caspian Sea is a land-locked interior basin with established oil and gas production that has seen increasing activity since the bordering nations gained independence from the former USSR in the late 1990s. Five nations surround the sea: Russia, Kazakhstan, Turkmenistan, Iraq, and Azerbaijan. National oil companies (NOC) control the drilling market, so there are limited opportunities for competitive drilling. But with the entry of international oil companies, drilling demand is increasing and requiring additional rigs.
Map: The Caspian Sea is experiencing growing drilling demand and attracting interest from major oil companies.
The remaining third is the competitive fleet, which includes four semisubs, five jackups, and one inland barge. Parker Drilling operates a competitive inland barge, Parker Rig 257, that can drill to 30,000ft in 18ft of water. Teniz Burgylau operates the other barge, a non-competitive submersible - Caspian Explorer, dedicated for the Zhambyl project off Kazakhstan. That rig is for near-shore work in up to 8ft water depth, for drilling to a maximum 6000ft drilled depth.
Caspian Drilling Co. Ltd., based in Baku, Azerbaijan, controls the semisub market with four rigs and it is building a fifth, a Keppel FELS DSS 38M design with a 3000ft water depth rating and 40,000ft drilling depth. Keppel Caspian Shipyard Co. in Azerbaijan is building the US$800million rig, which is scheduled for delivery 4Q 2016. The semisub will have an 800m, eight-point mooring system to hold the vessel on station during the Caspian’s high-speed winds, and 7m-deep pontoons for transit through shallow-draft channels.
The jackup market is divided between four players: Russia’s Eurasia Drilling Co. Ltd. (EDC, with 3 jackups); Dubai-based Momentum Engineering (1 jackup); Iran’s North Drilling Co. (1 jackup). In addition, Kazakhstan’s Teniz Burgylau LLP, a subsidiary of national company KazMunaiGas JSC, is building a new independent-leg, cantilever jackup of KFELS B design. The rig will be rated to 262ft water depth for drilling to 20,000ft, but the rig is upgradeable to 400ft water depth. The Keppel Kazakhstan yard in Aqtua, Kazakhstan is building the US$240million jackup for delivery in 1Q 2015.
Eurasia Drilling added the Neptune jackup to its fleet in early July and is building an additional rig that will enter the market next year. According to news reports, Lukoil president Vagit Alekperov said that Lukoil intends to drill the Khazri structure in the Caspian Sea at the end of 2013, using the Neptune jackup. The company also plans to use the rig to drill the Titonskaya structure in 2014. Aside from the NOCs, several major oil companies are actively exploring and developing drilling plans with their local partners for the Caspian including Statoil, ExxonMobil, Shell, CNPC, Lukoil, Conoco Mubaddala, Total, Petronas, Dragon, and Turkmen Exploration. OE
Image: The Saturn jackup is drilling for Petronas off Turkmenistan.Eurasia Drilling’s CFO W. Richard Anderson visited OE’s offices recently and provided an update of their operations.
OE: How are your Caspian offshore operations faring?
WRA: Eurasia bought Transocean’s Saturn rig for US$260 million in 2011. The jackup, a Keppel FELS CS Mod V design, is on a three-year contract (US$208,000/d) with Petronas for drilling off Turkmenistan. Petronas is a major client, who just signed a new three-year deal developing an offshore oil field off Turkmenistan. Offshore operations are about 5% of our revenue and about 15% of our bottom line, so they are a meaningful share.
Ice is a concern in the Caspian, but the operators of Kashagan field (in the Kazakhstan sector) have built berms in the shallow waters to protect the rigs from wind-blown ice. We’ll soon have four jackups in the Caspian, which will allow us to work in most of the sea.
OE: How are the rigs delivered?
WRA: Our new Caspian Sea rigs will come in by the Volga River and canal system. These are jackups of Super 116E Lamprell design and are being built in Sharjah, UAE. The first, Neptune, was commissioned in July and is on contract to begin drilling in late August. It should be on contract for the next five years at good day rates. The next jackup, to be called Mercury, is scheduled for delivery in November 2014. Both rigs can drill to 30,000ft. OE: What about areas east of the Caspian? WRA: Gas exploration is active onshore in Turkmenistan, but Chinese competition makes it tough to get a start there. Petronas and Dragon are our major clients offshore Turkmenistan. The Chinese are building a jackup in Astrakhan (Lamprell), but it isn’t ready yet.
OE: What are your plans for expansion?
WRA: We have designs to move into Russia’s northern offshore waters. Three major contracts were signed recently by operators for exploration in those northern seas [that will lead to future drilling].