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BRITISH OPERATOR TO BOOST PRODUCTION IN ALBANIAN OIL FIELD

Aug. 7, 1995

In a rare move, Albania has let joint venture rights to a foreign operator, Alliance Resources plc, London, to boost production in an oil field. Alliance will act as operator of a 50-50 venture with state owned Albpetrol in Kucova-Arrza field of southern Albania. Alliance will receive as much as 90% of revenues from incremental production in return for its investment, along with a management fee of 10% of current production. Alliance said Kucova-Arrza, which produces only 700 b/d of oil, holds

In a rare move, Albania has let joint venture rights to a foreign operator, Alliance Resources plc, London, to boost production in an oil field.

Alliance will act as operator of a 50-50 venture with state owned Albpetrol in Kucova-Arrza field of southern Albania.

Alliance will receive as much as 90% of revenues from incremental production in return for its investment, along with a management fee of 10% of current production.

Alliance said Kucova-Arrza, which produces only 700 b/d of oil, holds remaining reserves estimated at 25 million bbl of oil in reservoirs between 500 and 4,500 ft.

WHAT'S PLANNED

Alliance expects to boost Kucova-Arrza production to more than 7,000 b/d of oil within 5 years. Alliance initially will spend $1.5 million to evaluate methods to boost recovery.

John O'Brien, chief executive of Alliance, said the first task will be a study of the field for mechanical problems. Present oil production is commingled, so Alliance will then gauge each well as a basis for better field management.

This first phase will include well workovers, which is expected to lift oil production to 1,200 b/d. Once this is complete, Alliance plans to install enhanced oil recovery methods, with steam or polymer flooding the likely options.

Alliance said further investment of as much as $35 million is possible, depending on the outcome of early operations.

SMALL REFINERY

The field has an idle 9,000 b/d refinery on site, which the partners intend to restart as part of a long term rehabilitation program.

O'Brien said the refinery is best described as a topping plant, but Alliance plans to renovate it to allow processing of crudes from Kucova-Arrza and nearby fields for product sales on the local market. Production from Kucova-Arrza and other fields in the area currently goes to Ballish refinery, about 40 km away

O'Brien believes there would be enough local demand for products to justify expanding the field's plant to 20,000 b/d capacity, with more modern units to increase the percentage of gasoline produced.