According to the information and analytical data that were available at the time the decision was made, Block A was the best studied in terms of seismological survey and drilling work. One of the wells produced a small additive flow of gas and condensate. Also of some importance was the fact that this sector is closest to the territory on which the state-owned company Saudi Aramco operates on already discovered and developed hydrocarbon fields. Block A, with an area of 30,000 sq km is situated in the northern part of the Rub’ Al-Khali desert, alongside the world’s biggest oil field — Al-Ghawar. The feasibility study of this block pronounced its development to be the most profitable. And it was LUKOIL that won it in the competition with ExxonMobil, ENI and Occidental Petroleum.
The contractual obligations for the first survey period included seismological survey work in a volume of 8,750 km in 2D equivalent and drilling of nine survey wells, as well as processing and interpretation of the data obtained. We fulfilled the contractual obligations for the first survey stage on time, the drilling having been completed in full, while the volume of the seismological survey work was exceeded more than 2.5 fold. Also, during that stage, the depth of the target horizons increased compared to what was originally planned, so did our headway accordingly. LUKSAR thus fully discharged its obligations toward its shareholders and has now initiated active work to commercialize the discoveries made.
On the basis of the results of the exploratory wells sunk, the Ministry for Oil and Mineral Resources of the Kingdom of Saudi Arabia was sent official information about the discovery of two new natural gas fields (nonassociated potential gas reservoirs), for which evaluation plans have been approved.
Development of yet another discovered field was recognized as not commercially viable because of its small size. Besides, during the sinking of one of the exploratory wells, an additional reserve was discovered within the bounds of that previously declared. LUKSAR’s discoveries are a clear indication of major prospects for Saudi Arabia with respect to an increase in the gas reserves in the region of the Rub’ Al-Khali.
Unfortunately, the time of “easy discoveries” is past. The geology of the Rub’ Al-Khali desert is both specific and complex. For example, the frequency of seismological research here is considerably greater than at Russian fields and many forms of geological work to which we are accustomed are not applicable at all in this region. For this reason, we try to acquire the practical experience gathered by Saudi Aramco, LUKOIL and service companies operating in the Middle East and apply innovative solutions. This is a deliberate choice on our part and a competitive advantage enjoyed by LUKSAR.
Considerable experience has already been gathered of working under conditions that are new for a Russian company; invaluable knowledge of the geology of Block A has been collected and partnership relations have been established with many companies operating in the Saudi Arabian oil and gas industry. LUKSAR has earned itself a reputation of a reliable business partner and leader in the application of the latest drilling technologies on anomalous seam conditions. The complexity of the geological structures under study, the need to raise constantly the efficiency of the work and the focus on the ultimate result set LUKSAR the task of innovative organization in all spheres of activity.
The operations are coordinated by the Board of Directors of LUKSAR, which includes representatives of both the shareholder companies. Modern means of communications allow all questions to be resolved promptly and efficiently.
The board of directors of LUKSAR has adopted a unanimous business resolution to go over to the active phase of assessing the gas condensate field discovered. In accordance with this resolution, the company has rejected 90 percent of the initial territory of Block A and is concentrating on assessment work territories. LUKSAR’s main obligation currently is to fulfill the plans approved by the shareholder companies for evaluating the hydrocarbon reserves of two sectors, specifically to drill 5 appraisal wells and carry out 3D seismological survey work in a volume of over 1,500 sq km. The time schedule for this work is strictly fixed. One point of the agreement concluded between the shareholders makes commercialization possible only after complete assessment of discoveries. This is our task for the near future. The medium-term goal is to organize and launch gas and gas condensate production.
The Middle East is known to be a complicated region. LUKSAR has earned itself a reputation as a reliable operating company that is ready to work in the tough competitive environment, and can do so, alongside other oil and gas production companies of the Middle East.
From personal experience, I know that, during the work on Block A, Saudi Aramco took an interest in the geological and engineering approaches and technological solutions we applied and adopted some of them for its own use. So we are cooperating efficiently and on an equal basis with Saudi Aramco and this means that LUKOIL has the most favorable prospects for developing business in the Kingdom of Saudi Arabia — one of the strategically important countries in both the Middle East and the world as a whole. The company’s successful operations in Saudi Arabia, which is the leader of the Muslim world and of OPEC, as well as the world’s biggest supplier of oil, is of tremendous importance for LUKOIL’s image and exerts a positive impact on development of the company’s entire global business.
