Minijos Nafta announces new oil finds

  • 2001-05-24
  • Mark Taylor
VILNIUS - The Danish-Lithuanian oil company Minijos Nafta has discovered new oil deposits near its existing oil fields in western Lithuania. The announcement, made on May 18, comes in the wake of growing beliefs that Lithuania has a lot of oil left to be discovered.

One of the deposits, known as Aisenai-1, is currently being exploited and was producing 270 cubic meters a day during its first days of operation. The company believes that the other site, Degliai-8, will produce the same amount and will begin drilling the site soon. Minijos Nafta has invested 12 million litas ($3 million) in the Aisenai-1 site.

The company, a leading oil producer in the Baltics, believes that there is quite a bit of oil in Lithuania to be discovered but not as much as people may think.

"Lithuania has a significant amount of undiscovered oil," said Thomas M. Haselton, general manager of Minijos Nafta. However, referring to reports of the potential existence of 250 oil fields in Lithuania, Haselton said that the figure was "ridiculous."

But Haselton explained that his company expected to find 35 percent to 40 percent more oil.

Haselton's company currently operates 14 production wells producing about 7,000 barrels of oil a day. This figure has increased notably since the inception of Minijos Nafta in 1995, rising from 400 barrels a day that year to 2,000 barrels a day in 1997 to its current level. The company made a profit of 48 million litas last year.

Ignas Vaiceliunas, technical director at Minijos Nafta, contributes the substantial growth in production to the use of modern technology. "Three modern technologies have made the difference. These technologies include technology for 3-D seismic exploration, horizontal drilling and under-balanced drilling," Vaiceliunas said.

Haselton agreed and pointed out differences in production numbers between Minijos Nafta and competitors.

"Our worst well is twice as good as the best well of other joint ventures and five times better than the best wells of other companies," he said.

Haselton was also keen to talk about his company's environmental record which has been the focus of some scrutiny.

"We are very proud of our environmental record. We spend a great deal of time in minimizing possible environmental problems. We cause no environmental damage whatsoever," explained Haselton. He described negative reports on Minijos Nafta as "complete bull s***."

Minijos Nafta has been operating two controversial wells since last year. One of the wells is located on the border with a nature reserve and one is located within the reserve, which is located near Klaipeda.

Asked about the environmental attitude of Minijos Nafta, Vaiceliunas said that "Minijos Nafta signed a license agreement with the government in 1995 which gave the company exclusive rights over an area of land where all of their present wells are located, including the wells in question."

He went on to say that "a plan was submitted to the Ministry of Economy and the National Geological Survey by Minijos Nafta in 1999. The government never responded."

Royalties were another sticking point that Minijos Nafta squabbled with the government about. According to Haselton, Lithuania has the second highest royalty rate in the world. The current rate stands at 20 percent plus 9 percent if a company is using wells which are drilled by government firms.

"If the rate were 5 percent, the government would receive $1.25 million on $25 million of revenue. That's not bad," stated Hasleton. Minijos Nafta paid more than 51 million litas' worth of tax in 2000.

Both Vaiceliunas and Haselton were eager to point out the problems faced by former communist countries in the development of oil production. Countries such as Latvia and Kazakhstan have wells that are so old and ignored they pollute rivers and cause oil pools on land. They agree that if nothing is done to encourage oil production, Lithuania will go the same way as these countries.