The US oil major ConocoPhillips is planning to team up with Abu Dhabi-based Mubadala Development Co. to bid for oil and gas fields in the Caspian Sea off Turkmenistan, according to reports.
Mubadala and Conoco, the third-biggest oil producer in the US, have already been working together in partnership with KazakhstanÔÇÖs KazMunaiGaz on exploration in the Kazakh section of the Caspian Sea. The Houston, Texas-based company and Mubadala won access to ÔÇÿBlock NÔÇÖ in 2008 and plan to drill an exploration well in the third quarter of this year.
Turkmenistan, which holds the worldÔÇÖs fourth-largest gas reservesÔÇömostly beneath its eastern desertÔÇö is now seeking bids from foreign producers to find and develop oil and gas in its relatively untouched section of the Caspian Sea. The country has said it will retain ownership of almost all onshore resources.
A partnership with an Arab oil producer could provide Conoco with a better route to Caspian resources than one with Lukoil, RussiaÔÇÖs largest non-state oil company, in whom Conoco bought a 20 per cent stake between 2004 and 2006 with the aim of developing an alliance.
However, Conoco abandoned its plans to work with Lukoil in Iraq following an unsuccessful joint bid for the West Qurna-1 field; and in March it announced it would sell as much as half its stake in the Russian company.
As well as its Kazakh joint venture, Mubadala is currently working on oil and gas projects in Bahrain and Oman with Occidental Petroleum, the fourth-largest US oil company. It also owns Pearl Energy, a Singapore-based oil and gas producer which is active in South East Asia.
A joint venture off Turkmenistan could enable Mubadala and Conoco to export Caspian oil and would provide ready access to the port of Baku in Azerbaijan, from where crude could be shipped to western markets, bypassing Russia. Turkmenistan is also viewed as a promising source of supply for the proposed Nabucco pipeline, which would run through Turkey to Europe.
Analysts have suggested that Turkmenistan would prefer non-Russian companies to take stakes in its oil and gas fields, due to its historical dependency on its northern neighbour. Relations between the two countries also became strained last year when RussiaÔÇÖs Gazprom stopped buying Turkmen gas as a result of falling global demand.
By contrast, Turkmenistan has been strengthening ties with the UAE. In 1999, Dubai-based Dragon Oil won rights to operate in the country through a 25-year concession to develop two Caspian oil fields.
And late last year, DubaiÔÇÖs Gulf Oil and Gas and Petrofac EmiratesÔÇöa joint venture between Mubadala and the UK oilfield services company PetrofacÔÇöwon contracts worth $5.15 billion (Dh18.91 billion) to develop TurkmenistanÔÇÖs biggest gas field.
