LONDON (ShareCast) - (Sharecast News) - Georgia-focussed exploration and production company Block Energy has entered into an oil storage leasing agreement with the state-owned national oil company of Georgia, Georgian Oil and Gas Corporation (GOGC), it announced on Monday.
The AIM-traded firm said the deal would allow oil production to restart in around seven days at its West Rustavi field.

It said the agreement secured immediate access to up to 90,000 barrels of storage capacity at GOGC's main facility near the town of Sartichala, about 30 kilometres from West Rustavi and readily accessible from the Khakheti motorway that runs by the field.

Removing oil storage limitations was described by the board as a "critical element" in its fully-funded back-to-back drilling programme, which was designed to ramp up existing oil production and advance a contingent gas resource of more than 600 billion cubic feet.

The next step in the company's programme included the sidetracking of the adjacent and analogous well 38, and three of the field's other wells - two of which would also be tested for their historic gas discoveries.

In parallel to the immediate drilling programme, Block said a 3D seismic survey would be acquired to identify optimal locations for new horizontal oil and gas wells across the field.

"We are delighted to have secured first-class oil storage capacity at competitive rates close to West Rustavi, at a major facility where GOGC safeguards some 350,000 barrels on behalf of several well-established operators," said chief executive officer Paul Haywood.

"We can now allow well 16aZ to flow to its full potential, opening the prospect of excellent netbacks of $36 per barrel at $65 per barrel Brent and $3.40 per million cubic feet for gas.

"We are preparing a detailed operations update which we look forward to sharing with the market shortly, setting out our busy schedule for the next 12 to 18 months."

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