PLANS ADVANCE FOR FIELD DEVELOPMENT OFF AZERBAIJAN

Three more groups led by major companies have agreed to jointly develop three large Azerbaijani oil fields in the Caspian Sea.

The acceptances virtually assure that Guneshli, Chirag, and Azeri fields will be developed under terms of a consolidation plan disclosed by State Oil Co. of the Azerbaijan Republic (Socar).

Socar intends to unitize the fields for development as a single contract area governed by a single production sharing agreement (PSA). A management committee including all participants is to be formed to coordinate and supervise field operations.

Companies holding 94% of foreign interests in the three fields have agreed to Socar's unitization plan. Among foreign companies seeking a role in development, only Turkish Petroleum Corp. has not publicly agreed to Socar's terms.

Last week, a combine of British Petroleum Co. plc and Norway's Den norske stats oljeselskap AS accepted a 36.7% interest, Amoco Caspian Sea Petroleum Co. a 24.3% interest, and Pennzoil Caspian Corp. and Ramco Energy Ltd. a 17% interest in the proposed joint project.

A week earlier, a Unocal Corp. unit agreed to take a 16% interest (OGJ, June 14, p. 18).

INTERESTS NOT FINAL

BP is to receive about two thirds and Statoil one third of their 36.7% interest. The Pennzoil-Ramco combine did not disclose how it plans to divide its share.

All foreign interests in the joint development could be reduced by 30% if Socar exercises its right to take an equity interest in the project.

Socar and participating companies have formed a working group to resolve technical details posed by unitized development. A final PSA will require approval by the Azerbaijani parliament.

Fields involved in the unitized development plan are about 100 miles east of Baku, Azerbaijan's capital. Socar estimates combined recoverable reserves of Guneshli, Chirag, and Azeri fields at 4.4 billion bbl of oil and 7 tcf of gas. More delineation work will be needed to confirm reserve estimates.

In addition to working on a commercial agreement and joint development plans, Socar and foreign participants have formed the Khazar Pipeline Consortium Organizing Committee to devise a plan for an export pipeline running from Azerbaijan to an international deepwater port.

Copyright 1993 Oil & Gas Journal. All Rights Reserved.