BAKU, Azerbaijan, December 28. Trend presents a 2023 digest of perspective oil and gas structures in Azerbaijan.
Shafag-Asiman
A 30-year contract with Shafag-Asiman was signed in October 2010. The forecasted reserves of the Shafag-Asiman block stand at 500 billion cubic meters of gas and 65 million tons of condensate.
The block is located 125 kilometers southeast of Baku and is positioned at a depth of 650–800 meters, with the reservoir's depth at 7,000 meters.
Project status
In December 2022, bp and State Oil Company (SOCAR) signed a protocol to extend the Shafag-Asiman exploration period for six months until the end of June 2023 to allow completion of the seismic data reprocessing study.
In the first half of the year, bp successfully completed the interpretation of reprocessed data from the initial exploration well, SAX01, which was drilled in the Shafag-Asiman offshore exploration contract area, the company added.
The company said that ongoing efforts include evaluating the hydrocarbon resources encountered in the well and planning for future activities in this area.
Shallow Water Absheron Peninsula (SWAP)
SOCAR and bp signed a PSA contract on joint exploration at the potentially promising structures located in the shallow waters of the Absheron Peninsula on December 22, 2014.
This agreement is part of the government's plan to fully explore all the coastal areas of the Azerbaijani sector of the Caspian Sea.
The area of water covered by the PSA agreement between SOCAR and BP to carry out the development and exploration work in the shallow waters of the Absheron Peninsula extends along the southern part of the peninsula. The area reaches 1,900 square kilometers.
The sea depth is up to 40 meters in this territory, but the depth of the potentially productive strata is 3,000–5,000 meters.
Project status
bp will issue a cost recovery audit report on the Shallow Water Absheron Peninsular (SWAP) project in Azerbaijan at the end of 2023.
Following dry-hole results in each of the three prospective areas of SWAP PSA, the contract area was relinquished in December 2022. The joint operating agreement will continue in effect until a final settlement has been reached upon completion of the 2022 cost recovery audit report, expected at the end of 2023.
There are plans to tow the Satti drilling rig, which conducted drilling within SWAP, from Azerbaijan to Kazakhstan.
There are currently no upcoming projects in Azerbaijan for the Satti drilling rig.
Block D230
In May 2016, bp and SOCAR signed a memorandum of understanding (MOU) to jointly explore potential prospects in block D230 in the North Absheron basin in the Azerbaijan sector of the Caspian Sea.
The MOU gives BP the exclusive right to negotiate an agreement with SOCAR to explore and develop the D230 Block.
The block covers areas with a water depth of up to 300 meters and a reservoir depth of 3,000–5,000 meters.
Project status
On Block D230, the interpretation of the seismic data is currently ongoing. If the results from the interpretation of the seismic survey are positive, bp will consider further exploration activities.
Absheron
SOCAR and TotalEnergies signed an agreement on November 21, 2016, on determining the main contractual and commercial conditions of the first stage of development of the Absheron gas condensate field.
The agreement on exploration, development, and production sharing in the Absheron offshore block was signed on February 27, 2009.
The term of the contract amounts to 30 years. The contract area is 747 square kilometers.
The Absheron field is located in the Azerbaijani sector of the Caspian Sea, 100 km southeast of Baku, at a depth of about 500 meters.
Project status
TotalEnergies and its partner SOCAR announced on July 10 the start of production of the first phase of development of the Absheron gas and condensate field in the Caspian Sea.
This first phase has a production capacity of four million cubic meters of gas per day and 12,000 barrels a day of condensate. The gas will be sold on the domestic market in Azerbaijan.
Besides, TotalEnergies and SOCAR agreed to sell ADNOC (Abu Dhabi National Oil Company) 15 percent of their stake in the Absheron gas field on August 4.
After the completion of this transaction, which is subject to approval by the necessary authorities, TotalEnergies will own a 35 percent stake in the Absheron gas field, alongside SOCAR (35 percent) and ADNOC (30 percent).
Currently, the gas produced from the field is sold domestically, but given that volumes will increase in the next phase of the project, markets in Türkiye and Europe are being considered for export.
Azerbaijan’s share of oil and gas production from the Absheron field in 2024 will stand at 0.81 million barrels and 0.29 billion cubic meters, respectively.
The revenues of Azerbaijan’s State Oil Fund (SOFAZ) from this field will amount to $77.38 million next year.
Meanwhile, in the first nine months of 2023, SOFAZ received $6 million from Absheron field.
The field is expected to produce 2 million barrels of profit oil and 707.55 million cubic meters of gas as of 2023, while in 2024, these figures will rise to 4.05 million barrels and over 1.4 billion cubic meters.
Azerbaijan's Absheron field produced 0.6 billion cubic meters of gas from January through November 2023.
Ashrafi-Dan Ulduzu-Aypara (ADUA)
The ADUA exploration area is located around 50 kilometers east of Baku, with a water depth varying between 20 and 225 meters.
SOCAR and Statoil Azerbaijan (part of the Equinor group) signed a Production Sharing Agreement (PSA) for the Ashrafi-Dan Ulduzu-Aypara (ADUA) exploration area on May 30, 2018.
Project status
Seismic surveys carried out in the ADUA area give grounds to assume that the field is likely to have commercial oil and gas reserves.
Karabakh field
The Karabakh prospective structure was identified in 1959 as a
result of seismic surveys. It was specified in 1984, and its oil
and gas reserves were confirmed in 1997–1998 through exploration
drilling. The oilfield is located 120 km east of Baku, at a depth
of 150–200 meters in the open sea.
The consortium operated by Caspian International Petroleum Company
(CIPCO) drilled three exploration wells in the Karabagh PSA signed
in 1995: two wells found gas in the southeast portion of the
structure, and the third well indicated the presence of oil in the
western part of the structure. In 1999, the PSA was terminated due
to the non-commercial discovery.
In May 2018, SOCAR Karabakh and Equinor signed a Risk Service
Agreement related to the development of the Karabakh Oil Field in
the Azerbaijani sector of the Caspian Sea. According to the
agreement, they hold equal shares.
Project status
SOCAR has acquired Norwegian Equinor’s shares in the Azeri-Chirag-Gunashli (ACG), Karabakh fields, and Baku-Tbilisi-Ceyhan (BTC) projects on December 22, 2023.
Before the acquisition, Equinor held a 7.27 percent stake in the ACG oil fields, an 8.71 percent interest in the BTC pipeline, and 50 percent in the Karabakh field. Previously, SOCAR had a 25 percent stake in ACG, 25 percent in BTC, and 50 percent in the Karabakh field.
The transactions will be completed in compliance with all regulatory requirements and contractual obligations.
Equinor said that the company is in the process of re-shaping its international oil and gas business, and the divestments in Azerbaijan are in line with its strategy to focus on its international portfolio.
Besides, Equinor is starting the liquidation of its local companies in Azerbaijan. The Baku office remains open until the transaction is completed.
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