Dubai government-owned Dragon Oil, an exploration and production platform, has renewed the partnership contract in Turkmenistan with the state-owned company, Turkmen Oil, until May 2025, for a period of ten additional years with a total value of $1 billion.
The company will pay $500 million in cash and the remaining $500 million over the course of 13 years. This sum will cover the company’s commitment to supporting the projects of the Turkmen government, community development, education, public health, and some co-production benefits.
The signing ceremony of the agreement was held in the Turkmen capital, Ashgabat, with the presence of Engineer Ali Al Jarwan, CEO of Dragon Oil, and a few members of the company’s executives.
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 all located around 10 to 40 kilometers off the coast of the Cheleken Peninsula and at water depths of 10 to 30 meters.
Over a 22-year period, the company has spent $8.1 billion on wells drilling and setting up sustainable facilities, producing 437 million barrels of crude oil. Since 2018, Dragon Oil has shifted production from natural depletion of conventional oil to those supported by water injection, artificial lifting and lately gas injection.
“We welcome 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 sustainable strategic growth and within the plan to complete growth and expansion in its operating markets, including Turkmenistan, Egypt and Iraq, by continuing to intensify exploration work, develop fields and repair wells, to increase production capacity to 300 thousand barrels per day by 2026 compared to around 160 thousand barrels per day at present, according to its strategies and ambitions, which requires the development of existing assets and the acquisition of new opportunities.”
The company’s investments, during the contract extension period, are expected to reach another $7 billion to $8 billion to support expansion and development programs, while future production levels would range between 60 to 70 thousand barrels per day, the cumulative production of crude oil is expected to reach 350 million barrels until the year 2035.