Dragon Oil making interim arrangements to market Cheleken crude production

Turkmenistan operating Dragon Oil PLC (LSE: DGO) told investors that, whilst it is negotiating a new crude oil swap-deal with the National Iranian Oil Company, it is making interim arrangements to market more of its crude oil production through the western sales route via Baku, Azerbaijan.

Dragon Oil operates a Production Sharing Agreement (PSA) for the Cheleken Contract Area in the Caspian Sea, offshore Turkmenistan. Through the PSA, the company was granted a production licence for the exploration and development of the oil and gas resources in the Cheleken area for of 25 years. The PSA became effective on 1 May 2000.

Since the PSA began, Dragon Oil marketed the majority of its share of Cheleken’s entitlement barrels through a crude oil swap agreement with Naftiran, a subsidiary of the National Iranian Oil Co. Indeed in 2009, approximately 90% of its entitlement barrels were sold through this marketing route.  The 10 year swap deal expired recently.

Dragon Oil is currently negotiating with Naftiran to agree an extension of the existing swap agreement or a new swap deal.

The company said that it has historically maintained alternative marketing routes for its crude oil, primarily via Baku in Azerbaijan. Dragon Oil is currently making interim arrangements to market additional quantities of crude oil through Baku, and the company said it is satisfied that there is sufficient capacity, in its existing and other marketing routes, to satisfy current production.

http://www.proactiveinvestors.com.au/companies/news/6305/dragon-oil-making-interim-arrangements-to-market-cheleken-crude-production-6305.html