JKX clearance for Koshekhablskoye

UK-based oil and gas explorer and producer JKX Oil & Gas announced July 9 that it has received the final permit to operate its Koshekhablskoye production license in southern Russia. Final regulatory clearance to operate the field will allow JKX to start deliveries to Kubangazifikatziya, a large Krasnodar-based gas trading company, with which its wholly owned Russian subsidiary, Yuzhgazenergy (YGE), signed an agreement in March for the sale of 100% of the gas produced at the field over the course of 2012. Kubangazifikatziya, whose industrial clients in the Krasnodar region include Gazprom Mezhregiongaz and the Afipskiy Oil Refinery, will take delivery of gas from the field at the export flange and will be responsible for transport through the Gazprom network to end users.

However, the London stock exchange-listed company said the planned increase in production from Well 27 at Koshekhablskoye, initially planned for the end of the second quarter, had been delayed until the end of the third quarter, implying, according to Dennis Sakva of Kiev-based brokerage Dragon Capital, around $2.6 million of lost revenues. In 2010, Well 27 was tested to flow at a rate of 13 MMcfd, or 33% of the associated gas processing plant’s capacity. The company said that Well 27 was being side- tracked after tests indicated a blockage due to the extended shut-in period.

JKX had successfully tested over the last two years its W-27 and W-25 wells, which were shut-in until the commissioning of the gas processing facility. The reopening of both wells in May also revealed a partial blockage of the W-25 well, which also requires redrilling. JKX Oil & Gas reported this May that commercial gas delivery from the Koshekhablskoye field to the Gazprom network had been flowing since mid-April as part of the acceptance procedures for the field’s processing plant and associated facilities, commissioning of which was completed in the second quarter of the year. Regulatory inspections and approvals were formally concluded in May. The company, whose activities are predominantly focused on Russia and Ukraine, also disclosed in May that YGE had been awarded the Giorgievskoye exploration licence in the Republic of Adygea in southern Russia. The largest part of the 170.7 sq km licence lies adjacent to, and immediately south of the 32.65 sq km Koshekhablskoye licence, with part of it also running to the northwest of the field and covering its east and west flanks. JKX said at the time that it expects that most of the Oxfordian 2P reserves in the area will be recoverable through the existing wells on the Koshekhablskoye field.

However, a further 30-90 Bcf of contingent Oxfordian gas resources could be recovered by additional drilling, together with 140-180 Bcf of Callovian gas resources. JKX Oil & Gas, which also has licence interests in Hungary, Slovakia and Bulgaria, was founded in 1995 to search for oil and gas in the former Soviet Union. Its largest shareholder is Igor Kolomoyskiy, the co-owner of Ukraine’s Privat group, with a 27.06% stake. VTB Capital, a subsidiary of Russian state bank VTB, holds a 6.4% stake.