Azerbaijan, Baku, Dec. 24 / Trend S.Aliyev /
AZERI-CHIRAG-GUNASHLI (ACG)
The Azeri-Chirag-Gunashli PSA was signed in September 1994. The agreement provides for the development of the contract area within 30 years. Production in the Chirag field commenced in 1997, on Central Azeri at the beginning of 2005, West Azeri at the beginning of 2006, East Azeri at the end of 2006, deepwater Gunashli in spring 2008.
ACG participating interests are: BP (operator - 34.1 percent), Chevron (10.2 percent), SOCAR (10 percent), INPEX (10 percent), StatoilHydro (8.6 percent), ExxonMobil (8 percent), TPAO (6.8 percent), Devon (5.6 percent), ITOCHU (3.9 percent), and Delta Hess (2.7 percent).
The required investment is about $20 billion.
Status of the project:
In January to November 2009, Azerbaijan International Operating Company (AIOC) produced 38.6 mln tons of oil from the ACG field, that is 7.4 percent more than in the same period of 2008. In 2007, AIOC produced 33mln tons of Azeri Light crude against 23mln tons in 2006.
Earlier this year, BP, operator of AIOC, has resumed oil production in the Central Azeri field that was stopped in September last year due to gas emissions around the platform at sea. Production in the western part of the field from the West Azeri platform was stopped for precaution but later restored.
Currently, oil production in ACG comprises nearly 822,100 bbl per day against about 900,000 bbl before suspension of production in September.
Presently, the project is being developed to increase production of the Chirag field (a project called Chirag Oil Project (COP)) through the construction of a new platform -West Chirag. This platform will cover reserves that are located between the Deep Guneshli and Chirag platforms. The project will be authorized in the first quarter of 2010
SHAH DENIZ
The contract on development of off-shore Shah Deniz field was signed on 4 June 1996. Shah Deniz participating interests are: ВР (operator - 25.5%), StatoilHydro (25.5%), SOCAR (10%), LukAgip (10%), NICO (10%), Total (10%), and TPAO (9%). Gas production from the field began in December 2006. Gas is transported to Georgia and Turkey through the South Caucasus gas pipeline. Azerbaijan also purchases the fuel.
Status of the project:
In 2009, about 7.5bln cu m of gas and 1.9 mln cu m of condensate is planned to be produced from Shah Deniz. The gas is exported via the SCP pipeline and condensate via the Baku_tbili-Ceyhan. Four wells with potential daily production of more than 22mln cu m of gas and over 47,000 bbl of condensate operate in the field. In 2010, another well will be put into operation and the annual production will be brought to a peak - 8.6bln cu m.
Gas production in the first stage of development of Shah Deniz will total 180bln cu m.
ABSHERON
Absheron project Participants includes SOCAR (State Oil Company of Azerbaijan) - 40 percent, the French company Total - 40 percent and Gaz De France Suez - 20 percent.
The contract on the Absheron field signed Feb. 27, 2009 between SOCAR and Total. Later Total sold 20 percent of its equity participation in the contract to the company Gaz De France Suez. This is the, the most major oil and gas contract that has been concluded in Azerbaijan recently. The cost of the first exploration well is estimated at $100 million.
Status of the Project
In 2010, the project is scheduled to begin drilling the first exploration well. Further drilling will depend on the results of this well.
Total company is well familiar with the Absheron project, as it had been a participant in the first contract on the field before closing. Earlier a consortium of companies operated in Absheron operated by U.S. ChevronTexaco. This contract involved Total, but after drilling of the well the reserves were found commercially unattractive.
Absheron participating interests were: U.S. ChevronTexaco (operator) - 30%, SOCAR - 50% and Total - 20%.
BAHAR AND GUM DENIZ
Dec.22, SOCAR signed a PSA contract with Bahar Energy Limited for the exploration, rehabilitation and development of the Bahar and Gum Deniz offshore fields in the Azerbaijan sector of the Caspian Sea. Under the contract, SOCAR's equity is 20 percent and Bahar Energy Limited-80 percent.
Bahar Energy Limited was registered in the Jebel Ali Free Trade Zone in the UAE. SOCAR signed a memorandum of understanding with the firm April 16.
Status of the Project
The contract consists of two parts. The first involves the rehabilitation and stabilization of production on the field and the second - the exploration of the Bahar-2 promising structure.
Initially, Bahar Energy Limited planned to drill 50 new wells. Later on, the companies are expected to repair and restore 100 wells.
The contract is concluded for 25 years with the option of renewing for the next five years. Initially, SOCAR's share of profitable hydrocarbons will amount to 40 percent. In the future the share will increase to 90 percent. The investment will hit $1 billion.
About 70 percent of the production from this unit of fields will be implemented with new platforms that will be built. Also, it is planned to make maximum use of existing infrastructure. However, it is necessary to create a new infrastructure.
Under the second part of the contract, which involves the exploration of the Bahar-2 structure, plans include drilling one exploration well in three years and another in the fourth year.
Under the contract, SOCAR will receive 170,000 tons of oil and 630 million cubic meters of gas within three years.
In relation to the 2008 production at the fields should be increased in 1.5 times. In 2008, the Bhar filed produced 195 million cubic meters of gas and 54,000-55,000 tons of oil.
Gum Deniz has operated since 1955 and is located 21 kilometers southeast of Baku. So far, the field has produced about 28.9 million tons of oil and 27 billion cubic meters of gas.
Bahar has operated since 1969 and is located 40 kilometers southeast of Baku. So far, the field has produced over 16.8 million tons of oil and approximately 128.7 billion cubic meters of gas.
SHAFAG AND ASIMAN
In July 2009 in London, SOCAR and BP signed a memorandum on mutual understanding on the joint exploration and development of the Shafag and Asiman fields in the Azerbaijani section of the Caspian Sea.
The sides may sign a contract on these structures in 2010.
The memorandum, gives BP an exclusive right to negotiate on the conclusion of the PSA on the exploration and development of the block located in 125 kilometers south-east of Baku. The block has not been explored yet. The block is located at the depth of 650-800 meters with a depth of the reservoir at 7,000 meters.
DEEP-SEATED GAS IN THE AZERI-CHIRAG-GUNESHLI
Under the "Contract of the Century" signed by Azerbaijan in 1994, BP and its partners in the Azeri-Chirag-Guneshli project have the right to develop oil layers lying to Fasile (Break) suite. Based on the PSA, development of the lower horizons is the subject of a separate agreement.
Judging by other Azerbaijani offshore fields, one can argue that productive stratum placed after Fasile, namely the sandy suites Nadkirmakinsk and Podkirmakinsk and Gala, also contain hydrocarbons.
The deep gas reserves in the Azeri-Chirag-Guneshli field are estimated at 500 billion cubic meters. The deep gas production is also planned under the new PSA.
At present, SOCAR is considering proposals on development of the deep free gas at the Azeri-Chirag-Guneshli fields.
INAM
Inam participating interests were: SOCAR (50%), BP (25%), the Korean National Oil Corporation (20%) and RD/Shell (5%). Under the contract, had industrial oil reserves been found in the field, the field would have been operated for 25 years. Oil reserves were estimated there at 1.4-2bln bbl.
Status of the project:
Drilling of the second exploration well in Inam by BP found no commercial hydrocarbon reserves. The company eliminated the second exploration wells in this area. When drilling the company almost reached the design depth of 5,350 meters, but no commercial hydrocarbon reserves were found.
Under the Inam PSA, two exploration wells were planned to be drilled in the field. In 2001, the first exploration well INX-1 with project depth of 5,025 meters was drilled in the field. However, an accident took place on the well after which it was closed. This well was credited as fulfillment of obligations. Thus, all exploration obligations of the companies were fulfilled. No commercial hydrocarbon reserves were found.
The well was drilled in the contracted area covering about 225 sq km 140km south of Baku. Water depth in the contracted area ranges from 45 meters in the north to 200 meters in the south. Minimal depth of the so-called "bank of Inam" is four meters.
YALAMA (block D-222)
The contract was signed on 3 June 1997. Block Yalama (D-222) is the part of the largest structure in north-east part of Caspian and is located in equal parts in the Azerbaijani and Russian sections of the Caspian Sea in 30km on offshore distance. The depth of water around Yalama differs between 80 and 700 m.
A set of agreements on additional terms of exploration and development of the block D-222 was signed in 2003, providing for an increase in the interests of LUKoil in the project to 80% and extending the contract area to 3,000 sq km.
An agreement on sale of LUKoil Overseas 15% of the Yalama interests to the French company Gaz de France was signed in 2008. At present, share holding in the project is as follows: LUKOIL 65%, SOCAR 20% and Gaz de France 15%.
Status of the project:
Drilling of the second exploration well in the Yalama field began in October 2008. In 2009, LUKOIL has completed drilling of the well. No commercial hydrocarbon reserves were found.
In 2004, seismic research on the block was completed and drilling of an exploration well commenced. The first exploration well was drilled in 2005. No commercial hydrocarbon reserves were found.
Earlier LUKOIL Head Vagit Alakbarovb said that the Yalama project in the Azerbaijani sector of the Caspian Sea is frozen. The company does not plan to invest in the project further and defrost it in the future.
ARAZ-ALOV-SHARG
Araz-Alov-Sharg participating interests are: BP (operator) - 15%, Norwegian Statoil - 15%, U.S. ExxonMobil - 15%, Turkish TPAO - 10%, Canadian Alberta Energy - 5% and SOCAR - 40%. Required investments make up about $4bln.
Status of the project:
The project will remain frozen until the Caspian Sea status has been agreed upon between Azerbaijan and Iran.
ASHRAFI-DAN ULDUZU
The contract on development of offshore Ashrafi-Dan Ulduzu block of fields was signed on Dec. 14, 1996. Ashrafi-Dan Ulduzu participating interests were: BP - 30%, Unocal - 25.5%, Itochu - 20%, Delta Hess - 4.5%, SOCAR - 20%.
Status of the project:
The contract was closed due to discovery of commercially unattractive volume of hydrocarbons.
ATASHGAH-YANAN-TAVA-MUGAN-DENIZ
The project to develop offshore Atashgah-Yanan-Tava-Mugan-Deniz fields was operated by Japanese JAPEX possessing 22.5% in the project. Participating interests were: SOCAR 50%, Japanese INPEX - 12.5%, ITOCHU - 7.5% and Teikoku - 7.5%. Required investments in the project are estimated at $2.3bln.
Status of the project:
The contract was closed due to commercially unattractive volume of hydrocarbons.
ZAFAR-MASHAL
The contract for development of promising offshore Zafar-Mashal field was signed between the U.S. ExxonMobil and SOCAR on Apr. 27, 1999. SOCAR possessed 50% and ExxonMobil 30%. In 2000, the remaining 20% was transferred to the U.S. ConocoPhillips. Required investments in the project were estimated at $2bln and projected volume of oil reserves at 140mln tons, of which 100mln came from Zafar and 40mln from Mashal.
Status of the project:
The contract was closed due to commercially unattractive volume of hydrocarbons.
NAKHCHIVAN
The contract on the development of the perspective offshore structure of Nakhchivan was signed on 1 Aug. 1997. The parties to the contract were ExxonMobil - 50%, SOCAR - 50%.
Status of the project:
The project was closed due to failure to discover commercially attractive volumes of hydrocarbons.
GARABAG
The project to develop offshore Garabag field was signed on Nov. 10, 1995. Garabag participating interests were: LukAgip - 45.5%, Pennzoil - 30%, LUKOIL - 12%, Agip - 5%, SOCAR - 7.5%.
Status of the project:
The contract was closed due to commercially unattractive volume of hydrocarbons.
KURDASHI
Contract on exploration and development of the block of offshore fields Kurdashi-Araz-Deniz and Kirgan-Deniz was signed on June 2, 1998 between SOCAR - 50%, Italian Agip - 25%, Japanese Mitsui -15%, Turkish TPAO - 5% and Spanish Repsol - 5%. The reserves of each of the structures were evaluated at 90-100mln tons of oil.
Status of the project:
The project was closed due to failure to discover commercially attractive volumes of hydrocarbons.
LANKARAN-TALISH-DENIZ
The contract on development of offshore perspective structures of Lankaran-Talish-Deniz was signed on Jan. 13, 1997. The parties to the project are Total - 35%, OIEC - 10%, Wintershall - 30%, SOCAR - 25%.
Status of the project:
The project was closed due to failure to discover commercially attractive volumes of hydrocarbons.
LERIK-DENIZ
The contract on the development of the perspective offshore structure of Lerik-Deniz was signed on April 27, 1999. The parties to the contract were: SOCAR - 50%, ExxonMobil - 30%, other foreign oil companies - 20%.
Status of the project:
The project was closed due to failure to discover commercially attractive volumes of hydrocarbons.
OGUZ
The contract on the development of the perspective offshore structure of Oguz was signed 1 Aug. 1997. The parties to the contract were ExxonMobil - 50%, SOCAR - 50%.
Status of the project:
The project was closed due to failure to discover commercially attractive volumes of hydrocarbons.
SAVALAN
The contract on the development of the perspective offshore structure of Savalan was signed on Apr. 27, 1999.
Status of the project:
Now the contract has not been ratified by the Parliament of Azerbaijan. The parties to the contract are ExxonMobil - 30%, SOCAR - 50%, and 20 remains undistributed.
