Azerbaijani Cabinet of Ministers approves obligations within new oil and gas contract with foreign company
Azerbaijan, Baku, Feb. 16 / Trend /
The Cabinet has approved the provision, and commitments of the Azerbaijani within the contract on "Exploration, rehabilitation, development and production of the block of fields Bahar and Gum-Deniz fields in Azerbaijan sector of the Caspian Sea, the Cabinet of Ministers said.
In late December, SOCAR signed a PSA contract with Bahar Energy Limited company for the exploration, rehabilitation, development and production of the bloc, including offshore deposits "Bahar" and "Gum Deniz".
Bahar Energy Limited company was registered in the free trade zone Jebel Ali in the UAE. On April 16, 2009 SOCAR signed the memorandum of understanding with this company.
Deposit "Gum Deniz" has been exploited since 1955. It is located at 21 kilometers south-east of Baku. About 28.9 million tons of oil and 27 billion cubic meters of gas have been extracted up to now.
Deposit Bahar has been developed since 1969. It is located 40 kilometers southeast of Baku. More than 16.8 million tons of oil and approximately 128.7 billion cubic meters of gas have been extracted up to now.
During the next five years, specialists predict the pace of decline in gas production on "Bahar" at 15 percent, and condensate - at 10 percent.
SOCAR considers that stabilization of oil production and increase of remaining hydrocarbons on the fields of "Bahar" and "Gum Deniz" will be possible as a result of drawing foreign capital to e implement rehabilitation programs in the short term.
The contract consists of two parts. The first one involves the rehabilitation and stabilization of production on the field, and the second one - the exploration of promising structure "Bahar-2".
Under the contract, share holding of SOCAR is 20 percent and Bahar Energy Limited - 80 percent.
It is planned to drill 50 new wells at the first phase. Later, operations to repair and restore 100 wells are expected to be conducted.
The contract was signed for 25 years with a possibility to renew it for the next five years. Initially, the share of profitable hydrocarbon of SOCAR will be 40 percent. In future it will be increased to 90 percent. The amount of investments, to be invested in the contract, according to initial estimates, will amount to $1 billion.
Production from this bloc of deposits will be implemented by 70 percent from these new platforms to be built. It is also planned to use existing infrastructure fully. However it is required to create a new infrastructure.
The second part of the contract, which involves the exploration in Bahar-2 structure, plans to drill one exploration well during three years. If there is a need, then another well should be drilled for the fourth year.
Under the contract SOCAR will get 170,000 tons of oil and 630 million cubic meters of gas free of charge within three years.
The production at the fields should be increased by 1,5 times compared to 2008. In 2008, 195 million cubic meters of gas and 54,000-55,000 tons of oil were extracted from "Bahar" deposit.