First International Oil Corporation in Kazakhstan
Since 1997, First International Oil Corporation (FIOC), an energy company with its headquarters in Houston, Texas, has been involved in exploration and development of hydrocarbon fields in Kazakhstan.
FIOC’s main focus is on oil and gas exploration and development projects in the Caspian basin, where, as is well known, 3 out of every 10 major world hydrocarbon discoveries have occurred over the last 25 years.
The company was granted several hydrocarbon licences, and entered into a number of agreements with the Kazakh government on oil operations in West Kazakhstan. A total area of 37,000 square kilometres is licensed or contracted to FIOC in the country.
Notably, at the time of FIOC’s arrival in Kazakhstan, the richest and most profitable oil fields were controlled by other investors. Therefore the company focused on exploration structures which had been studied in detail during the Soviet period, and which were associated with high risks and costs. The fields which were licensed to the company for supplementary exploration featured small accumulations, heavy oil (particularly, Sazankurak) and a considerable depth of oil-bearing strata (such as Chinarevskoe, more than 5,000 metres).
Despite a number of operational problems, FIOC managed to complete a great deal of planned work within a very short span of time. Over 13,700 kilometres of archive 2D seismic profiles were revised, new 2D seismic surveys covered 2,600 kilometres, 3D surveys 465 square kilometres and high-accuracy gravimetric prospecting 1,936 square kilometres. A comprehensive analysis of seismic and gravimetric data was carried out in all the fields, which allowed a number of promising sites to be prepared for exploratory drilling. During this stage the company bought $750,000 worth of software, computers and workstation equipment.
FIOC drilled 26 wells with a total heading of 18,090 metres. A deposit was contoured at Sazankurak and, after an estimate by Netherland Sewell & Associates and the commissioning of a railway terminal, commercial production started at the site. New wells are being drilled, and production testing is under way in the Chinarevskoe oil and gas condensate field.
In addition to geological surveys, supplementary exploration and field development, FIOC carries out large-scale field construction, well testing and commercial well operation. FIOC, in conjunction with its Kazakh partners, is developing the Sazankurak oil field, Atyrau oblast, where over 1 million barrels of oil were extracted in 2000. At the end of 2000, production testing started in the Chinarevskoe gas oil and gas condensate field in West Kazakhstan. The total proved reserves of the two fields exceed 242 million barrels of oil, and joint daily output is 4,000 barrels. According to estimates, the potential of all areas contracted to FIOC amounts to 11.6 billion barrels of oil and oil equivalent.
Total investment in Kazakhstan by FIOC is about $92 million. The company largely employs Kazakh contractors and specialists.
FIOC has allocated more than $1 million for social needs in West Kazakhstan, including providing gas to rural areas, construction of public roads, reconstruction of a school, funding a mosque, and support for war veterans residing in the Atyrau and Aktyubinsk oblasts.
The company is making a sound contribution to the training of Kazakh specialists ($985,000), as stipulated in its licence terms, which includes not only professional development of company’s personnel, but also sponsorship support to Kazakh students studying domestically or abroad. Some of these students will be employed by FIOC and its partner companies after graduation.
To meet its operational needs, FIOC founded a number of joint ventures in Kazakhstan, including the Sazankurak joint stock company in Atyrau oblast, the Zhayikmunay in West Kazakhstan oblast, and others.
A memorandum of intent has been signed by FIOC with Rosneft and Itera Holding, which sets out their directions of co-operation in geological surveys in the Fedorovsky structure. The latter occupies an area of about 3,354 square kilometres in North-West Kazakhstan, adjacent to the Karachaganak field. An important provision of the forthcoming co-operation is access to the CIS pipeline systems, which will be granted to FIOC by Itera.
In addition, FIOC signed an agreement with Rosneft on joint development of the Aday structure (4,660 square kilometres), which is located 70 kilometres east of Tengiz. A joint venture will be founded with equal share distribution between the two companies. The main focus of operation will be on the lower Permian sediments, where numerous signs of oil presence have been found.
Another joint venture will be established with Falcon Oil from Germany for exploration of minor oil fields in the Sagiz structure (12,985 square kilometres), also with equal participation.
The adherence to novel technology allowed the company to accelerate the development programmes, discover a number of promising structures and boost the output of oil, which is being marketed both locally and abroad. The company’s success was largely assisted by its stability of performance and the trust it received from colleagues, contractors, local authorities and banks, the latter being best illustrated by the loans it received from the World Bank and the Bank Caspian.
In accordance with the agreements between FIOC and the government of Kazakhstan, the company will be active in the republic for many years to come. The vast area covered by company’s operations and the potential of the Caspian region, coupled with professionalism and investment capacity, guarantee the success of FIOC’s projects.
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