Contract on development of Azerbaijan’s offshore field on verge of cancellation
Azerbaijan, Baku, Dec. 25 / Trend , V.Sharifov/ Production sharing agreement (PSA) on exploration and development of D-222 (Yalama) promising field in the Azerbaijani sector of the Caspian Sea is on the verge of cancellation, because commercially unattractive volume of hydrocarbons was revealed in the area after drilling of two wells.
The contract on development of Yalama (block D-222) was signed on 3 July 1997. At present, share holding in the project is as follows: LUKOIL 65%, SOCAR 20% and Gaz de France 15%.
Upon drilling two wells in Yalama, LUKoil fulfilled its contractual obligations.
"[According to the contract] operator of the project may wish to extend the exploration period if considers that results of the drilling of [two] wells is not enough to assess the prospects for the field. However, SOCAR has not received such a request," a SOCAR representative said on Dec. 25.
LUKoil company did not find commercially attractive hydrocarbon reserves during drilling of the second exploration well. The well is being liquidated. The project depth of the second exploration well is 2,650 meters. Drilling was operated by Overseas Operating Company Ltd. The well was drilled at a distance of 22 km from the first exploration well in Yalama 690 meters beyond the surface. Drilling was carried out from the Heydar Aliyev rig owned by Danish Maersk Drilling company.
LUKOIL drilled the first exploration well on Yalama field in 2005 in depth of 4,400 meters. During the drilling, small volume of hydrocarbon was discovered which was not commercially interesting for the Company.
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