Dubai's Dragon Oil expands Turkmenistan investment with three new fields

Enoc subsidiary aims to increase the state’s income from oil revenues and create jobs

The Dragon Oil offshore oil platform is seen in the Caspian Sea off Turkmenistan. The country is 'very important' for the industry with its large oil and gas capabilities, Dragon Oil chief executive Ali Al Jarwan said. Photo: Dragon OilShow less

Dubai's Dragon Oil, a subsidiary of Emirates National Oil Company, has expanded its investment in Turkmenistan's oil and gas industry.

The preliminary agreement signed between Dragon Oil and state-owned Turkmenistan Oil includes increasing production with three new fields within Turkmenistan's Block 19 offshore area, Dragon Oil said on Saturday.

Dragon Oil did not disclose the value of the investment. The company, however, said it had conducted a seismic survey in the three fields at a cost of $35 million, the results of which were “promising”.

The fields are close to the Cheleken Contract Area, which is an oil-producing field in the Caspian Sea.

“Turkmenistan is a very important oil country and has large oil and gas capabilities,” Ali Al Jarwan, chief executive of Dragon Oil, said in the statement.

“We are seeking to strengthen our presence there through new investments that will reflect positively on both parties enhancing the state’s income from revenue and creating new jobs.”

Turkmenistan is one of the five Caspian Sea littoral countries, which is an area with large volumes of oil and natural gas reserves.

The country had more than 600 million barrels of proven oil reserves and 19.5 trillion cubic metres of proven natural gas reserves at the end of 2020, latest data from the BP Statistical Review of World Energy had shown.

Oil production in the country stood at 216,000 barrels a day in 2022, according to the US International Trade Administration.

Turkmenistan is also rich in hydrocarbon resources, having produced about 80 billion cubic metres of natural gas in 2022, with half going to export, mostly to China, ITA data showed.

The country consumes roughly 60 per cent of its oil production domestically and exports the remainder over the Caspian Sea, the ITA said.

Dragon Oil's new expansion plans in Turkmenistan extend partnerships between the two sides.

In 2022, Dragon Oil signed an agreement with state-owned Turkmen Oil to extend their partnership for another 10 years.

Under that $1 billion renewed partnership, which begins in May 2025, Dragon Oil will pay $500 million in cash, with the remaining half spread out over the next 13 years.

At the time, Dragon Oil has invested about $8.1 billion in well drilling and production infrastructure over its then 22 years in Turkmenistan, achieving a cumulative production of 437 million barrels of crude oil.

Dragon Oil has also continued to build up its international portfolio. This week, the state-owned company announced that it has started crude oil production from the Al Wasl field, its first oil discovery in Egypt.

The Al Wasl field, discovered in 2021, has an oil reserve of more than 95 million barrels and Dragon Oil started the project with plans for “early production” with a total investment of $200 million, it said.

The project includes establishing an offshore production platform and extending a production line and an electricity line to operate oil production pumps, Dragon Oil said.

Dragon Oil also plans to expand its presence in the Egyptian market this year by stepping up exploration and expansion efforts in various regions, enhancing field development initiatives, and undertaking well restoration to augment oil production in the Gulf of Suez fields.

Dragon Oil, an upstream oil and gas exploration, development and production company, also operates in Iraq.