Russian oil and gas company leaves Turkmenistan as the production sharing agreement has not been signed

The news outlet Neftkapital reports that Zarubezhneft subsidiary is leaving Turkmenistan.

The Russian oil and gas company has already held a tender for the organizational services of its shutdown.

Zarubezhneft together with Itera and Rosneft have been trying to get involved in Turkmenistan's projects since 2001. In 2003 and 2004 the companies established the joint venture ZarIT to develop three sections on the Turkmen shelf of the Caspian Sea. In 2013 Rosneft purchased Itera together with its share of ZarIT. For over 10 years the partners of the joint venture have been trying to conclude the production sharing agreement with the Turkmen authorities.

However, since the agreement on the separation of the Caspian Sea borders between Turkmenistan and Iran had not been signed, the production sharing agreement was not concluded and ZarIT operations were curtailed. In 2015 Rosneft and Zarubezhneft agreed to declare the joint venture bankrupt.

In 2011 Zarubezhneft and Itera, bypassing ZarIT, tried to conclude the production sharing agreement with Turkmenistan for the 21th section of the Caspian shelf. Awaiting the project Zarubezhneft registered its office in Turkmenistan in 2011. The company was hoping to get a 51% share in the project and become its operator. Yet, the production sharing agreement has not been signed so far.

As a result, according to Zarubezhneft annual report, Turkmenistan is no longer the country of potential interest for the oil and gas company.

Let us recall that on 29 June President Vladimir Putin of Russia adopted the draft Convention on the legal status of the Caspian Sea. The Convention might be adopted on 12 August in Aktau, Kazakhstan where the 5th summit of the heads of the Caspian states will be held. However, the draft Convention does clearly define the issue pertaining to seabed division. It just says that division of the seabed and subsoil of the Caspian Sea by sectors is agreed upon with neighbouring and opposite states taking into account generally accepted principles and rules of law.

Source: Chronicles of Turkmenistan