Sheberghan Gas Generation Activity (SGGA) Annual Report

The project's primary objectives include supporting the GIRoA in closing and implementing a $37 million contract for drilling one new well and re-entering two existing gas wells in the Juma-Bashikurd Field for testing and possible equipping for production. SGGA began Fiscal Year 2014 (FY14) by focusing its advisory services to support Afghanistan's Ministry of Mines and Petroleum (MoMP) in managing the contract with Turkish National Petroleum Corporation (TPAO). However, TPAO's delays in commencing work on the contract have severely hindered the project's progress. Despite MoMP's efforts to enforce the contract, TPAO failed to meet the required performance schedule, and the contract was not completed by the end of FY14. The delays have had significant implications for the project's objectives, including the inability to obtain new data needed to prepare reservoir estimates for the Juma-Bashikurd Field. This has hindered the project's ability to attract private sector investment for the proposed power generation development. However, the tendering of the Totimaidan Block for a production sharing contract has provided a mitigating factor, as the winning bidder will be required to evaluate the field and plan for its development. In response to the delays, USAID and SGGA agreed to expand the project scope of work to include retaining an international petroleum engineering firm to evaluate existing data from Soviet-era exploration for six known gas fields in the Sheberghan area. The firm will prepare reserve estimates, which will be essential for attracting private investment in the project. The project has also undergone revisions to the gas processing element of SGDP Phase II, with USAID revising the scope to direct SGGA to retain international advisors to prepare a proposal for a public-private partnership for the construction and operation of a large, scalable central gas processing facility and the construction of scalable gas gathering systems to serve both the Juma-Bashikurd Field and other fields in the Sheberghan area. The availability of reliable gas reserve estimates and the construction and professional operation of gas gathering and processing facilities are expected to provide a significant attraction for private investment in both upstream exploration and development of currently untapped or under-developed gas fields and in end-use projects such as power generation. SGGA has provided conscientious and timely technical assistance to MoMP throughout the project, including mentoring and support for the management of the contract. The project manager has received a good grounding in project management and developed an assertiveness that might not have occurred had the contract gone forward smoothly. The project's progress has been hindered by TPAO's delays, but the tendering of the Totimaidan Block and the revisions to the project scope have provided opportunities for the project to move forward. The availability of reliable gas reserve estimates and the construction and professional operation of gas gathering and processing facilities are expected to provide a significant attraction for private investment in the project. The project's success will depend on the ability to attract private sector investment and to implement the revised project scope. The availability of reliable gas reserve estimates and the construction and professional operation of gas gathering and processing facilities will be essential for the project's success.