Dragon Oil, a subsidiary of Dubai's Emirates National Oil Company (Enoc), has signed an agreement with Turkmenistan's state-owned Turkmen Oil to extend their partnership for another 10 years.
Under the $1 billion renewed partnership, which begins in May 2025, Dragon Oil will pay $500 million in cash, with the remaining half spread out over the next 13 years, UAE state news agency Wam reported.
Dragon Oil has invested about $8.1bn in well drilling and production infrastructure over its 22 years in Turkmenistan, achieving a cumulative production of 437 million barrels of crude oil.
The Cheleken complex, located in the East Caspian Sea in Turkmenistan, is the main production asset of Dragon Oil. It consists of two major offshore oil and gasfields, Lam and Zhdanov, which have been developed and maintained since 2000.
The partnership also includes another potential complex within the vicinity.
The extension of the partnership will allow more for investment opportunities and help in completing plans for increasing production capacity as part of a "constant commitment by Dragon Oil towards its profitable investments in the oil and gas sector in Turkmenistan", said Ali Al Jarwan, chief executive of Dragon Oil.
"The signing of this contract also marks a milestone in Dragon Oil's journey in a sustainable strategic growth and within the plan to complete growth and expansion in its operating markets, including Turkmenistan, Egypt and Iraq," he said.
Among the activities to be strengthened are the exploration and development of fields and repair wells, which would ultimately help to increase production capacity to 300,000 barrels per day by 2026, from about 160,000 at present, Mr Al Jarwan said.
Future investments are projected to reach between $7bn and $8bn, while production levels are estimated between 60,000 to 70,000 barrels a day, hitting about 350 million barrels by 2035, the company said.
Turkmenistan had more than 600 million barrels of proven oil reserves and 19.5 trillion cubic metres of proven natural gas reserves at the end of 2020, according to the BP Statistical Review of World Energy 2021.
Oil production in the country stood at 216,000 bpd in 2020, the report found.
The new investments will contribute to the further development of UAE-Turkmenistan ties, with both countries looking into various economic and investment fields, said Saeed Al Tayer, chairman of Enoc and Dragon Oil.
Dragon Oil also aims to launch several sustainable exploration activities within Turkmenistan with long-term benefits, said Mr Al Tayer.
Since 2018, Dragon Oil has shifted production in Turkmenistan from the natural depletion of conventional oil to production supported by water injection, artificial lifting and, lately, gas injection.
