OREANDA-NEWS. December 03, 2014. Eni has extended the duration of its production sharing agreement (PSA) to develop the onshore Nebit Dag area in west Turkmenistan to February 2032 and has transferred 10% of its stake to national oil company Turkmenneft.

The Italian company also signed a memorandum with the Turkmen State Agency for Management and Use of Hydrocarbon Resources to explore the possibility of extending Eni’s activities to Turkmenistan’s sector of the Caspian Sea, Eni said in a statement.

Eni remains the operator of the Nebit Dag block, where it retains a 90% share. Production at the block comes mainly from the Burun oilfield. Oil is transported via pipeline to the Turkmenbashi refinery, while Eni is compensated by the government with an equivalent quantity of crude oil at the Okarem terminal, on the south coast of the Caspian Sea.

Gas from the block is mainly used in the field for internal consumption and gas lift, but a portion is fed into the local distribution network. Gas lifting is the main support system for production at the Burun field.

Foreign participation in Turkmenistan’s hydrocarbons sector has not been straightforward. Most foreign companies operating in Turkmenistan are restricted to offshore PSAs – including Petronas, Dragon Oil, RWE, Buried Hill and Itera. Eni is one of only two foreign companies to have onshore exploration rights, along with China National Petroleum Corp. (CNPC).  

“The role of international companies in Turkmenistan remains limited,” Ashley Sherman, Caspian upstream research analyst at energy consultancy Wood Mackenzie, told Interfax. “There are several contracts for offshore projects – most notably with Dragon Oil and Petronas – but the onshore industry is dominated by the state. Service contracts remain the only option for onshore gas contracts, with the exception of a production sharing contract awarded to CNPC as part of the export deal.”

Eni has been operating in Turkmenistan since 2008, following its purchase of Burren Energy.