Smaller producers may be minnows to the Middle Eastern giants, but exciting developments are afoot in the world’s more modest upstream developers.
With attention on oil and gas producers around the world primarily focused on the major, well-known producers, countries working on the development of smaller reserves are often overlooked. Despite this, development to boost indigenous reserves and increase domestic production - particularly at a time of high international energy prices - continues at a significant pace in these countries.
Oil & Gas Middle East takes a look at the activity in some of the world's smaller producers, focusing on those that have topical plans to develop reserves - most are currently producing some oil (and gas) but at less than 100 000 barrels a day - and also at countries with no current production, but with ambitious exploration plans.
Cuba- talk of a breakthrough
Cuba has estimated reserves of 0.75 billion barrels and produced around 58,000 barrels a day of crude in 2007 - a level that has changed little since the start of the century. It is ranked around 60th in terms of world production.
Consumption is just over 200,000 barrels a day (imports from Venezuela are significant) and the island nation has a refining capacity of 300,000 barrels a day. This is currently being upgraded as part of a major agreement signed with the international arm of India's Oil & Natural Gas Corporation ONGC Videsh in 2006. That agreement with Spain's Repsol-YPF saw the Indian firm also take a 30% equity stake in several deep water exploration blocks along with Norsk Hydro of Norway (30%).
The blocks covering some 12,000 km2 are located in Cuba's Exclusive Economic Zone which the US Geological Survey has estimated could contain over four billion barrels of oil and up to 10 trillion ft3 of gas. Cuba opened these blocks to foreign companies in 1999.
Other companies operating in Cuba include Canada's Sherritt which currently accounts for two-thirds of the country's domestic production.
The company holds 40-100% indirect working interests in seven production-sharing contracts with production focused on fields at Yumuri, Varadero, Canasi, and Puerto Escondido along the north coast between Havana and Cardenas.
These near-shore oil reservoirs are accessed by directional drilling from land-based rigs to produce heavy oil, which is mainly used to supply fuel for Cuba's power generation facilities.
The Cuban government said earlier this year that it was optimistic of a major breakthrough in the country's oil reserves, even talking of becoming an energy exporter in the future. The country's Ministry of Basic Industries has said 2008 would be a key year for the country's oil sector, with high levels of seismic acquisition programmes and test drilling in the economic zone area. 2009 will see work continue on the Repsol-YPF operated blocks.
The government is also negotiating a further eight blocks - four with Venezuela's PDVSA and the others with an unnamed Asian company. Some 35 blocks are still available. Any major discoveries as part of the current exploration campaign are expected to see renewed interest in Cuba's offshore waters.
TimorLeste - economic hope
Timor Leste's reserves are all located offshore in the Timor Sea which separates it from Australia. Its estimated daily oil production in 2007 was around 90,000 barrels a day, from existing facilities put in place by former ruler Indonesia.
Oil and gas have become the mainstay of the country's economy, with revenues accounting for 95% of government income, thanks to an agreement signed with Australia following independence in 2002 on the division of some - but not all - reserves in the sea.
The fledgling state has since established a Petroleum Fund, based on the Norwegian model, to ensure revenues are maintained for future growth of the industry and economy.
The government has announced plans to develop a pipeline and petrochemicals plant to access its claimed stake in an estimated US $90 billion of oil and gas in the Timor Sea. Attention is focused on the Greater Sunrise field, estimated to contain 300 million barrels of crude and 8.3 trillion ft3 of natural gas.But field developer Woodside Petroleum reportedly favours a pipeline to Australian shores from the field. The field is in territory still claimed by both countries and they have until 2013 to sign a development plan.
The Timor government meanwhile is in the process of creating a new national oil company, which, among other things, would be tasked with sourcing funding for the proposed pipeline. This year it is due to release the findings of a joint feasibility study, with Petronas of Malaysia, on a natural gas plant and petrochemical production facility using Greater Sunrise feedstock.
The government has also launched its own legal and fiscal regime for investment, in both onshore and offshore areas. It has also launched a first offshore licensing round in 2005. The first phase of the process has seen the acquisition of over 6,000 km of 2D seismic offshore in the area that shares the same geological characteristics as Australia's Northwest Shelf.
In summer 2008 Italy's ENI announced it had made a new discovery in the Timor Sea, in an area jointly administered by both Timor Leste and Australia. A well drilled to around 3,600 m identified significant levels of hydrocarbon resource.
Tunisia- no big find (yet)
Rising energy demand has coincided with a tail-off in Tunisian oil production in recent years.
Oil production in 2007 was around 70,000 barrels a day, compared to consumption of over 90,000 barrels a day. The country has modest reserves of around 300 million barrels (proven) with possible reserves estimated by state owned oil company ETAP at 700 million barrels, but tapping this potential is proving difficult. Tunisia has lacked a major oil discovery on the extent of neighbouring Algeria and Libya despite its geological proximity.
In 2007 ETAP launched an increased five-year drilling programme aimed at an average of 15 each year compared to the previous eight. This followed a government decree in 2006 calling for increased investment in exploration and production at home and also for ETAP to buy into equity output abroad.
The government plans to drill 15 new wells per year between 2007 and 2011, up from an average of eight wells over the past five years. But despite only being a marginal producer foreign company interest in the country's acreage has been and remains strong. There are currently 50 companies working on 50 permits - 33 onshore and 17 off. Licensing rounds have been held every year this century with the offshore Gulf of Hammamet the main focus for activity.
Gas production averaged 6.8 million m3 a day in 2007 most from the Miskar offshore field.
This year ETAP signed a joint venture oil and gas exploration agreement with Australia's Cooper Energy. The company is planing to spend US $8.4 million over five years on a 4,500 km2 area in the Gulf of Hammamet.
ETAP has also embarked on a major programme of modernisation of existing offshore platforms to increase output from the Ashtart field in the Gulf of Gabes.
Pakistan- reducing import dependence
The government of Pakistan is trying to promote an exploration and development programme in the country in an endeavour to reverse the decline in crude oil production, boost domestic gas output and so ease pressure on its balance of payments and trade from high energy import bills.
Pakistan produced around 70,000 barrels of oil a day in 2007, while consumption is around 350,000 barrels a day. Crude reserves are estimated at 290 million barrels with gas 27 billion ft3.
Consumption is rising by around 4% a year and is expected to reach over 450,000 barrels a day by 2012 increasing the need for more imports. At the same time, production of oil could fall by as much as 20% from current levels, unless new sources are brought on stream. The reserve base has also been falling, following downward revisions by operators.
The country also lacks refining capacity to meet high domestic product demand. Most energy consumption in the country is gas accounting for 50% of total supply but without increased production, it will also require more imports and so is looking at several pipeline and LNG import projects to meet future growth.The prospects for further domestic production have also been undermined by political attempts to stall the planned privatisation of the Qardipur field, while the major pipeline link that would send Iranian gas to Pakistan has been on the table for many years, but remains deadlocked due to its routing and opposition from neighbouring countries.
Pakistan has made much effort to try and encourage foreign investors in the country's oil and gas sector. There are currently 25 companies active - 21 of which are international. Some 100 licenses are being explored covering around 300,000 km2.
The government had made efforts to promote foreign direct investment in the upstream sector, through internationally competitive incentives, particularly for onshore frontier areas. At the same time it is trying to promote joint ventures with local operators to increase the domestic skill base.
The country's largest producer, Oil & Gas Development Company, signed a cross assignment agreement with BP in February 2008 on several offshore blocks. In the last financial year 2007/08 it spudded 31 wells - 13 exploratory/appraisal and 18 development and added two new exploration blocks (Eastern Offshore Indus A and Shaan). It also made five new discoveries: Moolan-1, Moolan N-1, Pasakhi E-1, Pakhro-1 and Dhodak Deep-1 and in July this year Kunnar S-1.
New Zealand- striking it rich
New Zealand produced around 41,000 barrels a day of crude in 2007 against consumption of around 160,000 barrels per day. It produced 144 billion ft3 of gas in line with demand.
Government policy is to support the domestic market and discover potentially large oil and gas reserves in deep water basins. New Zealand has eight sedimentary basins with known or potential hydrocarbons onshore underlying the continental shelf as well as several deepwater basins within its Exclusive Economic Zone (EEZ).
Most production to date has been from the Taranaki Basin, but it is only moderately explored compared to other basins around the world and there is considerable scope for further commercial discoveries, as demonstrated by recent exploration successes.
The rest of New Zealand is under-explored, and most sedimentary basins have the potential for commercial hydrocarbon discoveries. Many untested structural closures are potentially larger than the giant Maui field in the Taranaki Basin.
Events this year have also raised the prospect of new finds in hitherto off limits areas. In October a United Nations Commission officially confirmed New Zealand's claim to the 1.7 million km2 Extended Continental Shelf (ECS) area, which includes rights to resources such as petroleum and minerals beneath and on the sea floor.
Two basins within New Zealand's new ECS are the Bellona and Monowai basins, which are on the southwest side of the Challenger Plateau and the country's Crown Minerals is to begin work to understand these basins and announce block offers for exploration within the next five years. The shelf extension will add to the 4 million km2 already within New Zealand's EEZ, giving a total offshore seafloor area of 5.7 million km2.
2007 saw a record 42 petroleum wells drilled in New Zealand, as exploration and development activity reached new heights. The Ministry of Economic Development also reported record spending of over NZ $1.5 billion on petroleum industry exploration and development. Another record was set in the number of offshore wells drilled - 17, up 10 on 2006. And activity in 2008 is expected to be at similarly historically high levels.
The Crown Estates has also opened up new opportunities for oil and gas exploration in Taranaki, Canterbury, Northland, and the East Cape of the North Island. The release of these areas with recognised petroleum potential was due to be announced this month (November 2008). Also, a block offer releases for deep water acreage in the Raukumara (East Cape) and Northland basins is expected before the end of this year.
In April, Origin Energy said it had identified a large double structure in the deepwater Canterbury Basin offshore Dunedin which it believed had the potential to be a giant oil or gas field. The Carrack-Caravel structural complex is two to three times the area of the Maui field in Taranaki.
Basin modelling has predicted that some 15 trillion ft3 of gas and over 6,000 million barrels of oil may have been generated and expelled from source rocks over many millions of years in the drainage areas, more than enough to completely fill both structures.
Also, in September a new potential in-ground gas resource of 1.2 trillion ft3 was declared by Christchurch-based L&M Coal Seam Gas, including an estimated 780 PJ from one permit in south Waikato. The gas is about 98% methane. Bolivia- amid political shift
Faced with declining reserves and the perception that foreign companies were not investing enough in the country's hydrocarbon resources, Bolivia began nationalising the oil and gas industry in 2006.
Bolivia only produces ‑ a small amount of crude, at around 70,000 barrels a day and this is expected to decline year-on-year, reaching just over 60,000 barrels a day by 2012, while oil consumption is expected to rise strongly.
But the country has significant gas reserves estimated at over 52 trillion ft3. Production in 2007 is estimated at around 15 billion m3 and is expected to rise to around 22 billion m3 in 2012. While this will still comfortably meet domestic demand, consumption is set to rise strongly meaning there will be less available for export. The country is South America's largest gas exporter.
Now there are ambitious plan to boost gas reserves by 10 trillion ft3, but while the government continues to dangle the threat of taking back control of gas assets held by foreign operators, there appears to have been an acknowledgment that tapping the country's substantial reserves is going to require international assistance. This is demonstrated by a 50% drop in investment in the country's oil and gas sector seen between 2000 and 2007.
The country's president Evo Morales said recently that he was looking for investment from Iran, Russia and Venezuela. He said talks had been held with all three on a US $10 billion petrochemical project. Political relations with the US remain rocky and the countries earmarked for future assistance are seen as an attempt to shift business links away from the US.
Bolivia and Venezuela announced in 2007 a US $600 million joint oil and gas exploration programme under a new company YPFB-Petroandina. This will explore in areas where YPFB holds the exclusive rights - the unexplored Amazon region north of La Paz and blocks in Chaco, in the south-east site of the biggest reserves now in production.
In September 2008, Gazprom and Total signed an exploration agreement with Bolivian state company YPFB to develop the Azero field in the south east of the country. YPFB has claimed the agreement could eventually require up to US $4.5 billion of investment.
In May the government took over control of four energy companies that held concessions in its territory saying there were several mega-projects on gas that needed to be realised.
But future prospects are also undermined by political unrest in the country. In August for example, YPFB was forced to suspend a drilling campaign in the Víbora field in Santa Cruz. This has since resumed.
Iceland- arctic frontier
Iceland launched its first licensing round in September 2008, covering areas off its northeast coast for both oil and gas. The round opens in January 2009 with bids required by April.
Up to 100 blocks are on offer in covering 43,000 km2 in the north of the Dreki area according to the country's National Energy Authority - most in water depths of between 1,000 to 2,000 metres.
The Authority has said that seismic surveys and other geophysical measurements indicate that producible quantities of oil and gas could be found, as they have been in adjacent and geologically similar areas.
The area shares a similar geology to that of eastern Greenland and western Norway and studies already carried out on the so-called Jan Mayen ridge on the Arctic fringe have indicated the presence of hydrocarbons.
The Authority has said it has already received interest from several international companies including some in the UK and Norway's StatoilHydro. Interest in the areas has been triggered by new deep-water drilling technology. But the round is designed to encourage further research and exploratory drilling to verify whether hydrocarbon deposits exist in the area.
The Icelandic government has said its aim is to encourage ‘sensible utilisation of oil resources found in the greatest possible harmony with the environment and society' and has warned there ‘is no assurance that producible quantities of oil and gas will be found in the Dreki Area, but it is clear that considerable oil and gas discoveries could have vigorous impact on Iceland's economy.'
Iceland currently has no oil or gas production and only modest domestic consumption, but the desire to discover indigenous resources has grown, not least because of the country's current financial crisis. Its geographical isolation also raises import costs significantly. Uruguay- gas hopes alive
Uruguay does not as yet produce any oil or gas but has refining capacity of around 40,000 barrels a day.
However this may all be about to change as this year the state energy company, ANCAP has announced there could be several offshore fields each containing as much as 3 trillion ft3 or natural gas. The hope is that these areas will contain similar geology to the Santos Basin in neighbouring Brazil.
ANCAP has reportedly received expressions of interest in exploration work in the area from Repsol-YPF, Petrobras, ENI and BO. Seismic studies carried out over the last two to three years have suggested there is at least one field - Tupi - with up to 3 trillion ft3 of gas at a depth of around 5,000m. The Uruguay government also believes there is oil but it will be two to three years before a drilling programme is completed to confirm this.
The government has said it intends to announce a first licensing round in December of 2008 for acreage in two basins - Punta del Este and Pelotas - with bids to be received by next July. The 10 to 14 blocks on offer will cover more than 90,000km2 and most will be around 8 000 km2 in size.
ANCAP is currently completing the acquisition of 2,500km of 2D seismic focusing on the Punta del Este area. Winning companies will be offered production-sharing agreements under which the contractor will assume all risks and costs.
There will be no royalty fees and no signature bonus, but it will require a minimum exploratory programme with returns based on a percentage of oil produced and profits.
ANCAP admits that the country's offshore basins present a challenging geology and they are still considered under-explored. But it also acknowledges that studies carried out so far have identified several potential leads and play both in shallow and ultra-deep waters that share characteristics with producing areas in the southern Atlantic.
Uruguay consumed just over 100 million m3 of gas in 2007 and if the recent discoveries prove to be as good as believed, they could supply the country for hundreds of years to come.
Greenland- the climate change irony
Greenland is very much a frontier area, yet believed to contain some of the world's largest remaining oil reserves. Studies are being carried out under a joint venture between the Greenland Home Rule Government and the US Geological Survey, which has said that waters off the country's north-east coast could contain as much as 100 billion barrels of oil.
Exploration work has also been carried out off the west coast, led by Greenland's Bureau of Minerals and Petroleum, which has estimated that there may be more oil in the area than production to date in the North Sea - or around 50 billion barrels.
Ironically, global warming may be playing a role in the prospect for the areas, as melting ice layers are making some areas known to have oil more accessible. Nevertheless, the challenges of operating in Greenland's climate would add to recovery costs.
In the country's most recent exploration licensing round - Disko West - the UK's Cairn Energy in partnership with Greenland's NUNAOIL has received four licences in block one and three and two blocks in the Open Door area offshore the southwest. International oil companies have now been awarded six out of eight blocks offered in this round including DONG Energy of Denmark, Chevron and ExxonMobil.
Also a potential stumbling block to the future development of Greenland's reserves has been removed in the form of an agreement between it and Denmark over future oil revenues. Any earnings will be used to offset Denmark's annual subsidy.For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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