BAKU WANTS TO DISCOVER NEW GAS FIELDS OFFSHORE, BUT UNDER NEW CONDITIONS

Azerbaijan will, possibly, discover new fields, Gregory Rayley, BP Azerbaijan Vice President for Exploration, said in his speech at the Caspian Oil& Gas 2013 conference in Baku at the end of last week.

Rayley is sure that new big gas fields will be discovered offshore Azerbaijan, if exploration is carried out properly.

The question is on what conditions the Azerbaijani authorities must cooperate with the foreign investors in the new projects.

A source from the State Oil Company of Azerbaijan (SOCAR) said that the contract on extraction of deep-lying gas on the Azeri-Chirag-Guneshli (ACG) bloc of offshore fields is expected to be signed till the end of the year to start production in 2019.

SOCAR’s specialists estimate the ACG gas resources at 300 billion cub.m. The consortium operated by BP, which has been extracting oil in ACG and is familiar with the peculiarities of the bloc, will be in charge of gas production. BP confirmed that the negotiations are conducted, but refused to comment.

The same source said that SOCAR has offered the consortium a new Risk Service Agreement (RSA with a minimum guarantee of compensation). Unlike the production sharing agreement (PSA), under the RSA contracts all extracted hydrocarbons will be transferred to SOCAR and it will sell them and distribute the made profit among all the partners of the project.

SOCAR’s representative said that SOCAR will take this mechanism as the basis, but it will also add some other ones, which will interest foreign partners. In particular, SOCAR is ready to compensate costs for the well drilling. He said the peculiarities of the Caspian Sea fields will be taken into account in RSA.—0—