Azerbaijan International Operating Co. (AIOC) June 8 sanctioned spending of $46 million to begin preparatory work for early oil production from Chirag field in the Caspian Sea.
An AIOC steering committee meeting that day heard of progress towards development of Azeri and Chirag fields and the deepwater portion of Guneshli field, which together have estimated reserves of 4 billion bbl of oil.
Around the same time an independent group claimed to have secured more than $500 million of a total $1.8 billion needed to finance a pipeline to take Caspian oil from Baku to Yumurtalik on Turkey's Mediterranean coast.
Meantime, Azerbaijan has approved the formation of a group led by Russia's Lukoil to develop Karabakh oil field in the Caspian Sea.
In addition, the World Bank has issued a $20 million credit to Baku for rehabilitation of the 50 year old Neftyanye Kamni oil fields that pioneered offshore oil development in the former Soviet Union. At least 50% of the fields' reserves remain. Much of the loan will go toward replacing 200 km of the piers to the nearshore platforms that developed the fields.
AIOC PROGRESS
The AIOC committee consists of representatives from State Oil Co. of Azerbaijan (Socar) and one each from 11 foreign partners (OGJ, Jan 30, p. 31).
The committee heard that during the last 6 months AIOC has begun refurbishment of Kaspmorneft rig to drill three appraisal wells and surveyed the existing Chirag-1 platform using the Tofiq Ismailov diving support vessel (OGJ, June 5, p. 22).
Three export routes for Caspian oil are being evaluated: via Russia by pipeline; via Georgia by rail; and through crude oil swaps with Iran by tanker.
The committee faces another 3 months of negotiations with Moscow, Tbilisi, and Tehran governments before it will make its final decision on the project's main export route.
British Petroleum Co. plc, an AIOC member, said the key issue at the meeting was exports of only early oil production. Long term export is likely to involve a major new pipeline.
Caspian Pipeline Consortium Ltd. earlier this year released details of a $1.2 billion pipeline that would ultimately take oil from the Caspian Sea to a Black Sea port for export by tanker through the Bosporus Strait (OGJ, Jan. 30, p. 38).
PIPELINE PROPOSAL
Oil Capital Ltd., New York, disclosed a plan to build a 930 mile pipeline with a capacity to export 700,000 b/d of oil via the most direct route from the Caspian to the Mediterranean.
The route cuts through Armenia, which according to Oil Capital Chairman Matthew Steckel has not been considered for pipeline plans to date because of the country's bad relations with neighbors.
"These things are passing now," said Steckel, "and there is increasingly a feeling that it is time to sit down and make business together."
Oil Capital has issued a letter of intent for infrastructure to a group of Austrian suppliers and hired John Brown Inc., Houston, as technical and engineering consultant.
Steckel said the project is a private company plan to offer an alternative to previous Caspian Sea Oil export options. He added that there was enough oil in the region to fill all the planned export pipelines.
KARABAKH GROUP
Karabakh is to be developed by a group of Lukoil 35%, Agip SpA and Pennzoil Co. 30% each, and Socar 5%.
Under an agreement signed in Baku, an ad hoc committee of the group will draft a definitive contract within 2 months.
Lukoil Pres. Vaghit Alekperov estimated Karabakh reserves at more than 730 million bbl of oil. Lukoil also holds a 10% interest in the AIOC group.
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