DRAGON OIL PLC (DGO)
www.dragonoil.com
Company Information
Dragon Oil PLC is an independent oil and gas exploration, development, and production company headquartered in the United Arab Emirates. Emirates National Oil Company L.L.C. (ENOC), a company owned by the Government of Dubai, has a 51% stake in Dragon Oil. The company holds a dual listing on the Irish and London Stock Exchanges. Dragon Oil is operational in Turkmenistan, Egypt, Iraq, Algeria, and Afghanistan.[i]
Contact Information
Group Headquarters
ENOC House II, 3rd Floor Right Wing,
Umm Al Hurair 2, Building 16
P.O. Box : 34666
Dubai Health Care City – U.A.E.
T: +971 4 3053600
F: +971 4 3356954
E: info@nulldragonoil.com
PB 744013,
9/1, Ata Gowshudow Street
GPS: 37°57’02.8″N 58°22’30.8″E
Ashgabat, Turkmenistan
T: +993 12 93-64-04
History in Turkmenistan
In 2000, Dragon Oil was awarded a 25-year Production Sharing Agreement to explore and develop oil and gas at the offshore Cheleken Contract Area. Dragon Oil was also awarded the exclusive right to negotiate an extension of up to ten years, following the completion of the original 25-year agreement. The Cheleken Contract Area includes two fields—the Dzheitune (Lam) and Dzhygalybeg (Zhdanov)—which together comprise 950 square km.[ii]
In March 2009, Dragon Oil released a statement revealing that senior employees—since fired—in the marketing and contracts department had solicited bribes from contractors.[iii]
In May 2012, it was reported that Dragon successfully completed a new well in the Caspian (Dzheitune) that was drilled to a depth of 2,010 meters.[iv]
Current Scope of Operations
According to Dragon Oil’s website, the company has “invested over US$1.5 billion in expanding oil production in the Cheleken Contract Area, and as such, is one of the largest foreign investors in Turkmenistan. The Group is producing from over 100 wells and has an aggressive development program comprising drilling new wells and a work-over program. Dragon Oil’s most recent operations within the contract area include subsea pipe laying, plugging, abandoning, and decommissioning old non-producing wells and platforms, geophysical/geotechnical surveys, engineering, procurement, installation, and construction of new platforms/installations.[v] According to an Azernews article[vi], Dragon Oil reached 90,000 barrels of oil per day(bopd) from its Caspian holdings and aimed for 100,000bopd for 2019-2020. The company employs approximately 2000 employees for the Turkmenistani branch, 200 of which are based in Dubai.[vii]
In April 2013, a report by Crude Accountability, in partnership with the Turkmen Initiative for Human Rights and the American Association for the Advancement of Science, highlighted a number of major oil seepages reoccurring within the Cheleken contract and Turkmenbashi port areas. The report noted that these persistent spills had been occurring for nearly a decade, primarily due to deteriorating Soviet-era infrastructure. In 1999, Dragon Oil received $75 million in loans from the European Bank for Reconstruction and Development (EBRD) for “the phased commercial upgrade of the Lam and Zhdanov oilfields.” Further, the EBRD highlighted significant environmental and health risks associated with the crumbling infrastructure and required Dragon Oil to verify the structural integrity of their facilities. The company’s operations were intended to upgrade any viable infrastructure or seal and abandon crumbling rigs.[viii] A follow-up report by OMANOS Analytics[ix] in 2019 found that many of the oil spills first detected in 2013 were still present, including possible leaks from undersea pipes. It is apparent that after two decades of receiving funding from the EBRD, Dragon Oil has still yet to fulfill its contract obligations.
In October 2017, The Turkmenistani government attempted to acquire a $21 million loan from the EBRD. Labeled under “transportation,” the loan would have been “provided for 5 years to enable CMI Offshore Ltd (the “Company”) to continue its growth programme in Turkmenistan and Kazakhstan.”[x] The loan would have supported the purchase and use of vessels between offshore rigs, that would have posed significant environmental risks to the Hazar Nature Reserve, a RAMSAR Site of International Importance on the Turkmen coast south of Turkmenbashi. Crude Accountability’s research highlighted that the loan lacked a comprehensive social and environmental impact assessment and would violate both the EBRD’s environmental and social policies and its Turkmenistan country strategy. The loan was canceled in 2019.[xi]
In 2010, Dragon Oil and a SOCAR subsidiary signed a transportation contract for Turkmenistani oil to flow through the Baku–Tbilisi–Ceyhan pipeline. The oil is transported via tanker to the pipeline that begins at the Sangachal Terminal, not far from Azerbaijan’s capital, Baku. Information on these tankers and their hull types is scarce, with no confirmation that the ships in use are double hulled. See the BP dossier for more information on the IMO’s construction guidelines for oil tankers and active tankers between Azerbaijan and Turkmenistan.
Dragon Oil is a repeated sponsor of the Turkmenistan International Oil and Gas Conference, receiving silver status in 2010, 2012, and 2019, gold status in 2020, and bronze status in 2021. The company was also a bronze sponsor (2010), and platinum sponsor (2019) of the Turkmenistan Gas Conference.[xii]
Environmental Concerns
Dragon Oil’s platforms are located to the north of Ogurchinsky Island, which is home to communities of Caspian seals, listed as endangered by the IUCN. In the event of an oil spill or other accident at the Cheleken Field, Ogurchinsky Island could be at risk. Beluga sturgeon also inhabit the sea around the island during the summer months.[xiii] According to Dragon Oil’s Environmental Impact Assessment, which was conducted prior to the outset of the project, the major offshore risks of their operations include blowouts, fires, loss of containment from subsea equipment, non-hydrocarbon fires in an offshore installation, collisions, and structural failure. Onshore risks, according to the EIA, include fires, boil-overs, vapor cloud explosions, and escalation. Additional risks—both on and offshore—include extreme weather, land erosion, earthquakes, laying of pipeline, and installation of jackets (damage during construction of structures).[xiv]
Community Relations
The EIA was published in October 1999, and public consultation meetings took place in accordance with EBRD standards, as the project received financing from the institution. According to the EIA, Dragon Oil consulted with twenty-nine organizations and forty-two specialists during the consultation process. Dragon Oil held public meetings in Ashgabat, Nebit Dag, Turkmenbashi and Cheleken as part of the public disclosure process.[xv]
Financial Disclosure
According to the company’s 2011 Full Year Results, Dragon Oil achieved $1151 million in revenues, a 67% increase over 2010.[xvi] The company, which is debt-free and has $1.34 billion in the bank, has been recommended by its Board of Directors to pay a full-year maiden dividend of 14 US cents/share for 2010, which will cost a total of US $72.2 million. The company’s oil reserves totaled 658 barrels and its gas reserves stood at 1.4tcf as of the close of 2011.[xvii] The company reported in 2014 an annual revenue of $1093mn, reportedly a 4% increase from the previous year. 60% of the company’s oil reserves recovered in 2014 were replaced, and yearly production rose 6.8% from the previous year to 78790 bopd.[xviii]
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[i] Dragon Oil plc, About Us, http://www.dragonoil.com/About_Us/Default.aspx?id=4. Original weblink no longer active.
[ii] Dragon Oil plc, “About Us,” Dragon Oil; http://www.dragonoil.com/About_Us/Default.aspx?id=4. Original weblink no longer active.
[iii] Eurasianet.org, “Turkmenistan: Dragon Oil guilty of ‘certain irregularities’,” March 24, 2009, https://eurasianet.org/turkmenistan-dragon-oil-guilty-of-certain-irregularities. Accessed February 17, 2022.
[iv] Andre Lamberti, “Dragon Oil completes new development well offshore Turkmenistan.” Proactive Investors, May 16, 2012; https://www.proactiveinvestors.co.uk/companies/news/35887/dragon-oil-completes-new-development-well-offshore-turkmenistan-42896.html. Accessed February 17, 2022.
[v] Dragon Oil, Turkmenistan, https://www.dragonoil.com/turkmenistan/. Accessed November 18, 2021.
[vi] Azernews, “Dragon Oil eyes to increase oil production in Turkmenistan,” https://www.azernews.az/region/141921.html. Accessed November 22, 2021.
[vii] Dragon Oil plc, About Us.
[viii] Crude Accountability, “Satellite Images of the Caspian Sea Indicate that Oil Spills and Oil Wealth Rob Citizens of their Environmental and Human Rights in Western Turkmenistan,” https://crudeaccountability.org/satellite-images-of-the-caspian-sea-indicate-that-oil-spills-and-oil-wealth-rob-citizens-of-their-environmental-and-human-rights-in-western-turkmenistan/. Accessed November 22, 2021.
[ix] Omanos Analytics, “Oil Spills in the Turkmenbashi Bay,” https://www.omanosanalytics.org/oil-spills. Accessed November 22, 2021.
[x] European Bank for Reconstruction and Development, “CMI Offshore,” https://www.ebrd.com/work-with-us/projects/psd/cmi-offshore.html. Accessed November 22, 2021.
[xi] Crude Accountability, “EBRD cancels Turkmenistan hydrocarbon-related loan,” https://crudeaccountability.org/ebrd-cancels-turkmenistan-hydrocarbon-related-loan/. Accessed November 22, 2021.
[xii] 17th Turkmenistan International Oil and Gas Conference, “Sponsors,” Turkmenistan International Oil and Gas Conference; http://www.oilgasturkmenistan.com/sponsors. Original weblink no longer active.
[xiii] Crude Accountability, Turkmenistan’s Environmental Risks in the Era of Investment in the Hydrocarbon Sector, Sept. 2007, 11.
[xiv] Dragon Oil Block II Field Development Project: Environmental Impact Assessment, Oct. 1999, Appendix G2, Hazard Analysis.
[xv] Dragon Oil EIA.
[xvi] Dragon Oil plc, About Us.
[xvii] Ibid.
[xviii] Dragon Oil, SEC Edgar Filing Tracker, “2014 annual report,” https://sec.report/nsm/Dragon-Oil-P-L-C/data-migration/86226108. Accessed February 8, 2022.