06 07 03 - WILL ARMENIA EXPORT OIL?

Artem Yerkanyan "PanARMENIAN.Net" analytical department 23.06.2006 GMT+04:00

International experts are optimistic about the restarted works in search for oil and gas occurrences.

In September Transeuroenegery Corporation, Canada, will launch exploring works to search for hydrocarbon in Armenia. The essential equipment will be brought in the near future and very soon it will be possible to say whether Armenia has a chance to enter the cartel of oil exporting states.

/PanARMENIAN.Net/ Specialists spoke of the necessity of exploring works still in 1950-ies. In mid 1970-ies the matter grew serious. But at that time the exploration was rather scientific than commercial and no serious funds were invested in it. Now the optimism has grown and Transeuroenegery Corporation has long-term plans. Canadians are ready to spend over $10.5 million on the first stage of the works that will take some 5 years. If things go well new investments will be made. The other day the company leadership concluded an agreement with a foreign company engaged in prospecting of oil and gas, which will deliver modern equipment to Armenia. This equipment will allow prospecting the bowels of the earth at a depth of 2500 km. The works will start in September while the first results will be known in February 2007. The Yerevan office administration is more optimistic about gas than oil. It should be also noted that the gas-well boring is easier. The exploring works will be launched in three Armenian regions - Armavir, Krasnoselsk and Shoghaghbyur. The Armavir sector is rated as the most promising. The only question is how much it will cost.

The first serious attempt to set oil and gas prospecting on a commercial path was made 10 years ago. At that time the California Energy Commission came to rather optimistic conclusion on oil and gas occurrences in the Armavir sector and even calculated the presumable amount of oil. January 27, 1997 the Armenian government and the Armenian-American exploration company signed a contract on prospecting in the Armavir license sector. The works were launched the same year however they did not last long. In July 2000, after the death of company owner Alen Poslen, the works were stopped. Since that time the company has just been processing the data received and looking for financial partners. In early 2004 Canada-based Idusmin Energy purchased the rights of the Armenian-American exploring company and resume works in Armavir.
In autumn the company was renamed into Transeuroenegery Corporation.
Before this the Canadians proceeded to prospecting in the northeast sector near Krasnoselks. In January 2003 the Corporation signed an appropriate memorandum with Geoenergetika CJSC. At that time Indusmin Energy received the right for conduction of exploring works on a territory of 3.5 thousand km2.

"I am sure there are oil and gas deposits in Armenia," said Head of the Corporation Armenian Office Mike Smith. According to him, the optimist is conditioned by the fact that there are rich occurrences of hydrocarbon stuff very close to the Armenian border with Turkey. There are also hydrocarbon occurrences in Georgia and foreign companies have already invested over $70 million in oil exploring in Georgia. By the way, Indusmin Energy, which is engaged in prospecting works in two geological sectors in Imeretia, was among the investors. The Canadians put up over $35 million.

They bored a well that has given 160-170 tons of oil annually since 1995. In Ninotsminda region, Javakhk, oil is being prospected for a long time already. It's unnecessary to speak of Iran and Azerbaijan. Thus, if all our neighbors have hydrocarbon we should have it too. The problem is that no proper attention was paid to oil and gas prospecting. Now, when the matter is seriously treated we can hope that Armenia will transform from an oil importing country into an exporting one.

V.V