The first-ever Afghanistan bidding round attracts major players

The Ministry of Mines, on behalf of the Government of the Islamic Republic of Afghanistan, launched the First Afghan Hydrocarbon Bidding Round 2009 to initiate hydrocarbon exploration in Northern Afghanistan.

Northern Afghanistan has been divided into 11 blocks, of which three were offered in this licensing round. The three blocks are Jangalikalan, Juma-Bashikurd and Kashkari; all of which have known hydrocarbon-bearing accumulations. Most of the fields in these blocks were discovered by the Soviets in the 1970s excluding the Angoat oil field, which was discovered in 1959. Except for the Angoat and Kashkari fields, the rest of the fields in the blocks on offer (Jangalikalan, Juma and Bashikurd gas fields and Aqdarya oil field) have yet to commence production. The Angoat field is the only oil fields currently on production, though the Kashkari field produced briefly in the 1980s.

Companies are required to submit an Expression of Interest (EOI) to pre-qualify to participate in the bidding round, by 15 June 2009.  Besides being eligible and qualified as per Articles 30 and 31 of the Hydrocarbons Law, bidders are required to have a market capitalization of at least USD 100 million for Kashkari block, $150 million for Juma-Bashikurd, Jangalikalan blocks and $200 million for all three blocks.  Additionally, applicants must have experience in production of sour gas in order to bid for the Juma-Bashikurd and Jangalikalan blocks.  Successful pre-qualification applicants will be announced on 1 July 2009.

“We met different companies in different cities. We saw representatives from Total, Shell, BP, ExxonMobil, ConocoPhillips,” the country’s Minister of Mines Ibrahim Adel said on the sidelines of the final road show in Singapore.

However, interest was muted at the Singapore road show. While the turn-out was big in London, Houston and Dubai, where the world’s major oil and gas companies have large teams, only a handful of companies attended the Singapore event.

“This may be because Singapore is more the place for independent companies. And these companies are not really out looking these days,” a consultant who was attending the road show told the news agency.

Officials from China’s Sinochem, Malaysian heavyweight Petronas, which has interests in nearby Turkmenistan, and small independent Australian outfit Twinza Oil, turned up at the Singapore roadshow.

Wells have been drilled on the three blocks, with output at one of the oilfields at 12,000 to 13,000 barrels per day (bpd), when it was in production for a short six-month period.
Kashkari’s proven reserves stand at 64.4 million barrels, with possible reserves seen at a higher 143.8 million barrels.
Juma has proven reserves of 33 billion cubic metres, while Jangalikalan holds more than 19 Bcm.
But security concerns and the lack of data could dampen interest in the round.

Afghanistan currently produces about 200 million cubic metres of gas per year, against up to 5 Bcm during the Soviet era.
Analysts said investment in the country’s unproven hydrocarbons market made little economic sense near term, but long-term investors could see rewards if and when a proposed regional pipeline came on line.

Last April, Turkmenistan, Afghanistan, Pakistan and India signed an agreement for a $7.6 billion pipeline to bring natural gas south from the Caspian to the Arabian Sea.

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