Azerbaijan, Baku, Oct. 27 /Trend, E.Ismayilov/
One of the main factors contributing to the return of foreign companies to perspective offshore structures in Azerbaijan, where commercially attractive hydrocarbon reserves had not previously been found, is the increase in hydrocarbon prices and technology development, said a source in oil and gas market.
As an example of prospective structures, the source described the structure of the Absheron and Nakhchivan, located in the Azerbaijani sector of the Caspian Sea.
According to the source, despite that the increase in hydrocarbon prices has also led to the rise in price of services companies, the forecasts on prices increase encourage companies to participate in these projects.
Initially, foreign companies intended drilling three wells: one at the dome of the structure, other one at one of its wings, and the third one at water contact. Over time, companies have become limited to one well at water contact, as it allows to define the boundaries of the field and its possible reserves at no additional cost for drilling.
Consequently, within new exploration work in prospective structures "Absheron" and "Nakhchivan", foreign companies conduct drilling at water contact in the new points that are closer to the center of the structures that can yield positive results.
According to the source, the approach of these and other companies to participate in projects on exploration and development of prospective structures and fields depends on the coefficient of profitability of projects.
Participants to the Absheron project are SOCAR (State Oil Company of Azerbaijan) - 40 percent, the French Total Company - 40 percent and Gaz De France Suez - 20 percent.
The new contract on Absheron structure was signed on Feb. 27, 2009 between SOCAR and Total. Later Total ceded 20 percent of its participation share to Gaz De France Suez.
This is the second attempt of the foreign companies to start production of commercially attractive hydrocarbon reserves of prospective Absheron structure. In 1997 the first PSA was signed for exploration and development of this site between SOCAR, which had received 50 percent share in the project, U.S. Chevron (30 percent - project operator) and Total - 20 percent. But after drilling an exploration well, the discovered reserves were considered commercially unattractive, after which the contract was closed.
Regarding the Nakhchivan structure, a memorandum of understanding between SOCAR and German RWE was signed on 10 March this year. Within one year, the companies must conduct all necessary work to prepare PSA.
The reserves of the structure are projected at 300 billion cubic meters of gas and 40 million tons of gas condensate.
The first contract to develop offshore perspective Nakhchivan structure had been signed on August 1, 1997. Project participants were: ExxonMobil - 50 percent, SOCAR - 50 percent. The contract was closed due to detection of commercially unattractive volumes of hydrocarbons.