BP/Statoil to upgrade Russian semi for Caspian prospect

An alliance of BP Exploration Operating Co. Ltd. and Norway's Den norske stats oljeselskap AS (Statoil) has issued a letter of intent to Kvaerner AS, Oslo, for upgrading a Russian Shelf-class semisubmersible rig. The rig will be used to drill in as much as 475 m of water on Shah Deniz prospect in the Caspian Sea off Azerbaijan. The prospect lies southwest of Chirag field, currently under development (see map, related story, this page).

Jan. 20, 1997

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The rig will be used to drill in as much as 475 m of water on Shah Deniz prospect in the Caspian Sea off Azerbaijan.

The prospect lies southwest of Chirag field, currently under development (see map, related story, this page).

Although Shah Deniz has not been drilled, it has been said to have potential to hold 5-6 billion bbl of oil, and a Statoil official said the alliance's preliminary estimate pegs potential reserves at 2.5 billion bbl of oil.

The rig is slated for drilling the first well on Shah Deniz in fourth quarter 1998. Upgrading will include fitting the rig with equipment rated for drilling in deep water.

Rig use

Kvaerner said total value of the rig upgrade is expected to be about $100 million.

Other prospective operators in the region are expected to help fund the upgrade in return for a share in its use.

The contractor said interim project work will cover engineering, procurement and project management: "An important factor for awarding the contract to Kvaerner is our past experience with the conversion of the Shelf 12 and Shelf 8 rigs at the Vyborg shipyard in Russia."

Shah Deniz license partners are operator BP and Statoil 25.5% each; State Oil Co. of Azerbaijan Republic, Lukoil, Elf Aquitaine, and Oil Industry Engineering & Construction-a group of Iranian state and private interests-10% each; and Turkish Petroleum AO 9%.