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Turkmenistan has also been exporting some of its crude oil through Iran. In April 1998, Monument Oil and Gas PLC signed a crude oil swap arrangement with the government of Iran in order to export at least some of its oil from Turkmenistan. Under the terms of this 10-year deal, the first oil was shipped in July 1998 and the quantity involved was scheduled to grow from 4, 000 b/d in the first year to as much as 70, 000 b/d by the later years of the agreement (Table 1).

A further swap deal with Iran was signed by Dragon Oil PLC, operating offshore in Turkmenistan's sector of the Caspian Sea. This deal, which also saw first shipment in July 1998, envisioned 2, 000 b/d of Turkmen oil being exported to Iran in the first year, with the volume rising to a maximum of 32, 000 b/d by 2007 (Table 1).

Both Monument Oil and Gas and Dragon Oil supplied Cheieken Blend to Iran in exchange for Iranian Light, which they lifted on a barrel-for-barrel basis from the Kharg Island export terminal in the gulf. Iran charged the two companies a transit fee and separate port charges at Neka that depended on the volume of crude oil throughput.

Although the volume of oil exported under the agreement with Dragon Oil has not matched expectations (with production averaging around 10, 000 b/d from its two fields in Turkmenistan), the company continues to use the route for a large portion of its crude oil exports.

Monument's operations in Turkmenistan were taken over by Burren Energy Ltd. in August 2000.

The company continued to export its oil (production reaching 11, 000 b/d in 2002) through Iran until September 2001, when it decided to reroute shipments through Azerbaijan and Georgia.

Iran has always sought to boost exports of Caspian oil across its territory. The much-delayed plans to expand the capacity of an existing oil pipeline from its Caspian Sea port of Neka to Tehran are finally moving ahead under a consortium led by the China Petroleum & Chemical Corp. (Sinopec) and China National Petroleum Corp. Ltd.

The first phase of the project—expansion of the capacity of the Neka terminal to 370, 000 b/d and construction of a 16-in. pipeline from Neka to Sari—was completed in 2002, boosting the route's capacity to 50, 000 b/d. A second phase of the project—to extend the 3 2-in. pipeline from Sari to Veresk— will raise capacity to 165, 000 b/d, while a third phase—to extend the 3 2-in. line all the way to the Rey terminal near Tehran—will boost capacity to 435, 000 b/d.

Further expansion to 500, 000 b/d would then be possible through the construction of additional pumping stations along the pipeline's route (Fig. 1). Iran is still struggling to secure substantial supplies of oil from Central Asian producers in spite of a reduction in the swap fee it charges to $ 16 from $21 /tone for oil from Turkmenistan and $13/tonne for exports from Kaza­khstan.

It has, however, scored a recent success from an unexpected source: Russia.

In November 2002, Lukoil exported its first 30, 000-tonne cargo of oil produced in the Volga-Urals basin by its Nizhnevolkzhshneft subsidiary.

The oil is transported down the Volga River from Volgograd to Atrakhan and then across the length of the Caspian Sea to Neka.

Lukoil stepped up the volume of its exports via Iran after the first trial cargo and exported approximately 100, 000 tonnes in January 2003. The company expects to export 1 million tonnes of oil by this route during 2003, implying an average rate of 20, 000 b/d, and plans to sign a long-term oil export contract with Iran in March.

Although this is only a small start, the trade could grow significantly in the years ahead, particularly if Lukoil's exploration acreage in the north Caspian yields the hoped-for results.

Questions:

1 Did Oil and Gas PLC sign a crude oil swap arrangement with the government of Iran?

2 When was the first oil shipped?

3 The first phase of the project was completed in 2002, wasn’t it?

4 When did Lukoil export its first 30.000-tonne cargo of oil?

5 What does Lukoil plan to sign with Iran in March?

19.1 What is the article about?