Azerbaijan determines sources of funding second new generation drilling rig construction

Oil&Gas Materials 8 December 2013 14:03 (UTC +04:00)

Baku, Azerbaijan, Dec. 8

By Emil Ismayilov - Trend:

A drilling rig will be required in 2017 to get the first gas from the Absheron gas condensate field in the Azerbaijani sector of the Caspian Sea, a source on the oil and gas market told Trend on Saturday.

"Gas production within the indicated period will require the necessary drilling operations, as well as creating all necessary mining infrastructure," a source said. "The main issue in the Absheron field development is the free floating drilling rig."

At present, there are three large drilling rigs in Azerbaijan (the Heydar Aliyev rig, the Istiqlal rig and the Dada Gorgud rig), which are involved in the development of Azeri-Chirag-Guneshli block of oil and gas fields and Shah Deniz gas condensate field. Moreover, a floating drilling rig of the new generation, to be used by SOCAR in field and prospective structure mining in the Caspian Sea, is being constructed in the country.

A new drilling rig is required for the development of the Absheron field.

The issue of creating the second new drilling rig in Azerbaijan is at the stage of determining the sources and a mechanism of funding its construction, the source said.

The new drilling rig construction can be realized in case of full financing (or its large part) by the French Total, which has a 40 percent stake in the Absheron field development project.

Caspian Drilling Company can be the operator of the new rig.

The operator of SOCAR's first drilling rig will be the Caspian Drilling Company (CDC) where a 92.44 percent share is owned by SOCAR.

Total's funds will be returned by reducing the company's daily expenses for using the rig.

"This will significantly reduce the cost of the platform operating process, which will beneficial for the company," the source said.

After all Total's funds are returned, the rig will be fully owned by Azerbaijan.

"Taking into account the plans for obtaining the first gas from the Absheron field, all issues must be resolved in 2014," the source said. The construction of the platform that will serve the field may be launched in late 2014.

Following the drilling of an exploration well, discovery of Absheron large natural gas field in the Azerbaijani sector of the Caspian was announced in September 2011.

The field potential reserves amount to 350 billion cubic meters of gas and 45 million tons of condensate.

Participants of the Absheron project comprise SOCAR - 40 percent, French companies Total - 40 percent and Gaz De France Suez - 20 percent.

The contract on the field was signed on February 27, 2009 between SOCAR and Total. Later Total sold 20 percent equity participation to Gaz De France Suez.