BP tipped for new project at Azerbaijan's main oilfield

Mon 18 Apr 2011 05:46 GMT | 09:46 Local Time

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Oil major BP is likely to be the technical operator of a new project to develop gas reserves in the deeper strata at the Azeri-Chirag-Guneshli bloc.

Khoshbakht Yusifzade, first vice-president of Azerbaijan's state oil company SOCAR, made the comments in an address on the country's oil strategy at a conference in Baku today.

As part of the Azerbaijan International Operating Company (AIOC), BP is already the operator of the main ACG project, which produces around one million barrels of oil per day, and the supplementary Chirag Oil Project.

The production sharing agreement on ACG between Azerbaijan and the AIOC does not include development of the gas reserves in the bloc's deeper layers.

Other projects being worked on by SOCAR include the development of the deep strata at ACG, Yusifzade told the Caspian Oil and Gas Energy and Transportation conference.

"BP is proposing to be the project operator, and we are holding talks on this with them. BP will probably be the technical operator of the project, but the contract will not be the same as for ACG. If everything goes to plan, gas production from the deeper layers at ACG will start in 2017," Yusifzade said.

He said that the strata beneath the Chirag and Guneshli blocs would be developed in the first stage of the project and the Azeri strata in the second stage, 1news.az reported.

The contract could be signed by the end of the year and will include companies that are not involved in the Azerbaijani International Operating Company (AIOC), Yusifzade told journalists at the conference.

The AIOC consists of operating company BP (with a 37.43% share), Chevron, SOCAR, ExxonMobil, Amerada Hess, Inpex Corp., Itochu Oil, Statoil and TPAO.

Shah Deniz

SOCAR would also like to see development of the deeper productive layers at the Shah Deniz condensate field, Yusifzade told journalists at the conference.

"SOCAR has raised with the project consortium and operating company BP the need to drill new exploratory wells. According to our assessments, gas reserves in the lower strata could be from 200bn to 250bn cubic metres," Yusifzade said.

The Shah Deniz consortium consists of operating company BP (25.5%), Statoil, SOCAR, Lukoil, NICO, Total and TPAO.

Yusifzade said at the conference that Phase II of the Shah Deniz project would increase overall gas production from the field from 8.6-9bn cu.m to up to 25bn cu.m per year.

Production and export

Azerbaijan produced 50.7 million tonnes of oil in 2010 and 26bn cubic metres of gas, Yusifzade said.

This represents a more than fivefold increase in production since 1997, which is mainly down to international contracts, he explained. SOCAR maintained more or less stable production over that period.

Yusifzade said that recoverable reserves at ACG totalled 925m tonnes of oil and 280bn cu.m of gas, while Shah Deniz had reserves of 1.2 trillion cubic metres of gas and 240m tonnes of condensate.

Since starting to export oil and gas, Azerbaijan has supplied more than 255m tonnes of oil to world markets.

Yusifzade told the conference that as of 1 March 2011, 150m tonnes of oil had been exported via the Baku-Tbilisi-Ceyhan pipeline, 55m tonnes via the Baku-Supsa pipeline, 33m tonnes via the Baku-Novorossiysk pipeline and 17.7m tonnes via rail.

As of 1 March, 17.5bn cu.m of gas had been exported via the Baku-Tbilisi-Erzurum gas pipeline, while 1.1bn cu.m had been exported to Iran and 3.6bn to Russia.

Field development

SOCAR is continuing exploration at the Umid gas condensate field, Yusifzade told journalists at the conference, according to Fineko/ABC.

He said that in May SOCAR would begin drilling the second exploratory well (Umid 10) at the field.

"The well will be 7,500 m deep and will be drilled with a deviation of 500 m from the first well," Yusifzade said.

The second well is intended to delineate the field, discovered in November 2010. At that time SOCAR found two productive strata - the fifth and seventh horizons.

The field has estimated reserves of 200bn cu.m of gas and 40 million tonnes of condensate.

Yusifzade does not expect the second well to increase seriously the field’s reserves.

He said that SOCAR had resumed work at the Bulla Deniz deposit last year.

"Our aim is to reach the eighth horizon. Drilling to a depth of 6,400 metres has begun at the field," 1news.az reported the SOCAR first vice-president as saying.

He said that drilling to a depth of 4,900 m had also begun at the Alat-Deniz field.

"Further exploration and development of the Karabakh and Ashrafi fields are in our future plans. The development of other structures in the shallow water part of the Caspian is also being worked on."

Yusifzade said that development was also planned of the Babak, Asiman, Zafar-Mashal, Nakhchivan, Shafag and Absheron deposits.

SOCAR and BP signed a production sharing agreement on the joint exploration and development of the Shafag-Asiman structure in October 2010.


SOCAR is planning to expand its network of petrol stations to 95 by the end of the year, Yusifzade said.

The largest number of SOCAR filling stations, 60, are in Georgia.

"SOCAR controls two-thirds of Georgia’s market for oil products. There are six SOCAR filling stations in Azerbaijan but their number should be increased to 30 in future.”

SOCAR has 20 filling stations in Odessa and is studying further investment opportunities in Ukraine, Yusifzade said.

Romania is another market which SOCAR is studying at present.

Commenting on SOCAR's construction of an oil terminal at Fujairah in the United Arab Emirates, Khoshbakht Yusifzade said,  “Fujairah is a trade centre with great potential.”

Rufat Abbasov


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