AIOC sanctions Chirag oil project

Azerbaijan International Operating Co. (AIOC) has sanctioned the investment of $6 billion for the Chirag oil project.

By OGJ editors
HOUSTON, Mar. 16
-- Azerbaijan International Operating Co. (AIOC) has sanctioned the investment of $6 billion for the Chirag oil project.

The project plans to increase oil production and recovery from the Azeri, Chirag, and deepwater portion of the Gunashli fields (ACG fields) through a new offshore facility that will fill a gap in the field infrastructure between the existing Deepwater Gunashli and Chirag-1 platforms.

AIOC expects the project to recovery an additional 360 million bbl of oil from the ACG fields with first oil production from the project starting in 2013.

The project involves installing new wells that will primarily target the currently producing Fasila reservoirs and also the Balakhany X, IX, and VIII reservoirs above the Fasila. AIOC expects facility construction and the predrill program to cost about $4 billion and has slated the remaining $2 billion for drilling development wells from the platform.

AIOC developed the ACG fields in several phases. Chirag has been on production since 1997 as part of the early oil project. The Azeri Project Phase 1-Central Azeri production followed in early 2005. This was followed by production from Phase 2-West Azeri starting in January 2006, from East Azeri starting in October 2006, and from Phase 3-Deepwater Gunashli starting in April 2008.

AIOC expects overall production from the ACG fields to reach 1 million bo/d and the fields to eventually produce more than 5 billion bbl of oil. To date the fields have produced 1.4 billion bbl of oil.

Operator BP PLC has a 34.1% interest in the ACG fields. Other interest owners are Chevron Corp. 10.2%, State Oil Co. of the Azerbaijan Republic 10%, Inpex Corp. 10%, Statoil ASA 8.6%, ExxonMobil Corp. 8%, Turkish Oil Corp. 6.8%, Devon Energy Corp. 5.6%, Itochu Corp. 3.9%, and Hess Corp. 2.7%.

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