Elf, a partner with a 10% interest in the offshore Shah Deniz permit operated by BP Amoco, has participated in a major gas condensate find in Azerbaijan. The Shah Deniz permit lies about 70 km south-east of Baku. It covers an area of 860 square kilometers and stands in water depths of 100-600 meters.
The well SDX-1, the first well on the Shah Deniz permit, was drilled to a total depth of 6,316 meters in water depth of 132 meters. It encountered gas condensate in three separate horizons, with a total net pay zone of 220 meters and had a flow rate of 1.4 million cubic meters of gas and 3,000 barrels of condensates per day during production tests.
This giant structure will require additional appraisal work in order to evaluate the scale of the discovery. A second well has already been spudded.
In addition to its stake in the Shah Deniz, Elf is also the operator of the Lenkoran permit in the Caspian Sea, with a 40% interest. First drilling is planned for the end of 2000.
Elf's operations in Azerbaijan are part of its strategy to develop a series of producing subsidiaries outside its traditional operating regions in Europe and Africa. The very good results obtained on well SDX-1 consolidate this strategy. They also hold out the prospect for the Group of access to very substantial gas reserves, significantly bolstering its plans in the downstream gas sector. They represent a substantial practical outcome to the Exploration and Production division's drive for growth.
Thomas Saunders 33.1.47.44.42.30
Catherine Durand: 33 1 47 44 37 76
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ELF'S THIRD GROUP OF OIL PRODUCING SUBSIDIARIES TAKES SHAPE
By 2005, 25% of Elf’s production will come from a third group of subsidiaries outside its traditional operating zones in the North Sea and the Gulf of Guinea.
In addition to the 100,000 barrels of oil equivalent (boe) per day currently operated by Elf in Syria, Qatar and the Gulf of Mexico, we are now witnessing the start-up of gas and LNG production in Brunei, and that of CEPSA in Algeria, soon to be joined by Virgo in the United States. Projects to exploit the gas reserves in Syria’s Deir ez Zor zone have been set in motion, as have projects to develop the Dorood and Balal fields in Iran, and the development of the giant Oghrou field in Algeria by CEPSA, involving aggregate reserves in excess of 2.2 billion boe. Not to mention the contribution of production expected to flow from the development of the giant gas and condensates fields of Shah Deniz in Azerbaijan.
All this is the outcome of the strategy adopted a few years ago. The strategy is being driven by a combination of extensive exploration of large-scale prospects in still relatively unexplored basins, and by efforts to develop already-discovered reservoirs.
After an initial phase devoted mainly to negotiations and accumulating a high quality portfolio of leasehold assets, the emphasis is now shifting to work in the field. The first positive results have been increasing in over the past few months.
- In the United States, two deep offshore discoveries in the Gulf of Mexico—Acacongua and Matterhorn—were made in February and April. They join Virgo (discovered in April 1997), which is scheduled to come onstream at the end of 1999. We can thus look forward to production from this zone rising more than threefold by 2002 (60,000 barrels par day vs 17,000 bd at present). A few months will be spent on additional appraisal.
- In the Middle East, the Deir ez Zor contract in Syria was signed at the end of 1998, providing for the production of 1.8 billion cubic meters of gas and condensates a year in 2002. In February and March of this year, Elf signed two buy back contracts in Iran for the redevelopment of the Dorood field (900 thousand barrels of additional reserves to be brought into production as from 2001) and the development of the Balal field (scheduled to come onstream in 2002).
- In Latin America, a major exploration campaign centered mainly on the Andean foothills discovered two gas accumulations in March and May, one in Trinidad and Tobago, the other in Peru. These are now under appraisal.
- In the CIS, the discovery of a giant accumulation of condensates and gas hydrocarbons on Shah Deniz represents a major success.
These initial successes underscore the wisdom of this strategy. They will significantly contribute to the emergence of a third group of producing subsidiaries. Before these results, this group represented only 3% of the Group’s worldwide reserves, and 4% of its production.
Other programs currently aimed at sustaining and amplifying the trend include:
Libya: preparations for the development of the field on block C37 and negotiation of an exploration contract,
Algeria: development by Cepsa of the Oghroud field (more than one billion barrels) and negotiations to engage in operations on previously-discovered fields.
Egypt: exploration of the B permit in deep water in the Nile Delta.
Negotiation of numerous projects to explore and develop fields in Iran, Syria, Qatar, and Iraq, together with a gas supply project in Lebanon.
Proposal to carry out projects in Kuwait on fields this country is planning to open up to oil companies, and in Saudi Arabia for integrated gas-electricity operations,
Azerbaijan: exploration of the Lenkoran Talysh permit,
Romania: initial deep offshore exploration in the Black Sea, on the Neptune permit, close to a proven oil province.
Redeployment of exploration on deep offshore themes with major potential all along the Atlantic coast: entry in a vast 90,000 km2 lease in Barbados, and negotiations nearing completion in Brazil for two leases, in the prolific Campos basin, the other in the Amazon delta.
Application to develop the Camisea gasfield in Peru.
Ambitious ongoing program of exploration on the 80 deep offshore permits acquired over the past 3 years.
Development of this third group of subsidiaries is taking place through a varied array of contracts and very well-stocked portfolio of large-scale, high-quality projects.
This third group is making an increasingly important contribution to wealth creation for Elf Aquitaine’s shareholders.
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Disclaimer
The foregoing statement contains forward looking statements, including statements regarding trends, opportunities, revenues and growth projections. These statements are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. However, whether actual results and developments will conform with our expectations and predictions is subject to a number of risk and uncertainties set forth in Elf Aquitaine's Annual Report or Form 20-F field with the US Securities and Exchange Commission, general economic, market or business opportunities (or lack thereof) that may be presented or pursued; changes in laws or regulations and other factors which could cause actual results to differ materially from those projected. Consequently, all of the forward looking statements are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated will be realized or, even if substantially realized, that they will have the expected consequences or effects on business or operations referred to herein. We assume no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events or otherwise. |
