The field was first drilled in 1963 with gas discovered in the Paleocene carbonate reservoir at a depth of 1,050 meters and then the field was appraised with 10 wells, although never put onto production. The Ukraine government estimates reserves of 14 Bcf while Transeuro Energy third party auditors have assigned possible reserves of 2.7 Bcf. The company re-entered two wells in 2004 that tested at 33,000 and 22,000m3/day and commenced construction of a gas treatment plant that was then suspended due to the low gas price available in the country at that time.
The company has now entered into a gas sales agreement through its local subsidiary to sell all gas produced from the two wells to a local Ukraine Company “AutoGasComplect”. The buyer intends to process the gas into compressed natural gas (CNG) to sell for use in vehicles within Crimea, and is responsible for the cost and installation of all surface equipment and to commence production within four months. The point of sale is at the wellhead and Transeuro Energy is not required to contribute any funds to the project. The contract volume of gas to be sold is not defined, but assuming a likely average rate of 35,000 m3 per day the annual net profit to the local subsidiary after taxes and royalties is forecast around $1 million.
David Worrall, president and chief executive officer of Transeuro Energy commented, “This is an exciting time to commencing gas production in Ukraine and to prove our ability to deliver tangible results. We are grateful for the assistance provided by our state partners ‘Nak Nadra’ and ‘Crymgeologia’ for their support and co-operation in concluding this agreement and in particular to Mr. Vasily Boyko and Mr. Vladimir Daryichuk. Together with the recent announcements concluding the RAG settlement and the extension of the Karlavskoye license our Ukraine strategy is now back on track.”
