Azernews.Az

By Gulgiz Dadashova

Partners in project on the development of the Azeri-Chirag-Guneshli (ACG) oil and gas fields' block in the Azerbaijani sector of the Caspian Sea could to stabilize the production volumes.

Bulk of Azerbaijan's oil production is accounted for the giant ACG block of oil fields, that has been producing since 1997. The production started from Chirag and it continues successfully. Central Azeri production started in February 2005, while that on West Azeri started in December 2005, and East Azeri came on stream in October 2006; Deepwater Gunashli launched production in April 2008. The next step of the ACG development, Chirag Oil Project (COP), is expected to begin production later this year.

President of Azerbaijan's state energy company SOCAR Rovnag Abdullayev said that now daily production at the ACG is 95,000 tons, which can be regarded as an approximation to the annual volume of 33 million tons.

Abdullayev believes that the stabilization of oil production volumes was achieved as a result of relevant work done here.

"Now, the work is underway on the preparation of stabilization programs for 2014, 2014-2024 and 2024 until the completion of the development process," Abdullayev said.

Earlier it was reported that a program covering the complete development of the ACG will be finalized by late 2013.

Oil production was nearly 43 million tons in Azerbaijan in 2012, 5.3 percent less than in 2011.

The government expects oil output to grow in 2013.

"Oil production in Azerbaijan declined in 2011 and 2012, but it will increase in 2013. The increase in oil production will continue in 2014. This is linked to the completion of repair work and the construction of new wells," the government said earlier.

According to a recent BP report on the results of operations in the first quarter of 2013, BP and its partners extracted 8.06 million tons (59.6 million barrels) of oil from the ACG fields.

The average daily oil production on ACG in Q1 was 662,000 barrels.

To date, the field has produced about 2.2 billion barrels of oil.

Equity participation in the contract on ACG is distributed as follows: BP (operator) - 35.78 percent, Chevron - 11.27 percent, Inpex - 10.96 percent, AzACG - 11.65 percent, Statoil - 8.56 percent, Exxon - 8 percent, TPAO - 6.75 percent, Itochu - 4.3 percent, and ONGC - 2.72 percent.

Deep-bed gas on ACG

Abdullayev also said that the primary version of the risk-service contract to develop the deep-bed gas on the ACG block has already been granted to partners and now they are considering the proposals.

He said that agreement on the project will be concluded on the basis of contract with a minimum guarantee of compensation (Risk Service Agreement).

"In the future, the company intends to operate on the structures with less risk under contracts such as the Risk Service Agreement. For projects with higher risks the work will be carried out under contracts such as PSA," Abdullayev said.

The first contract for the ACG development was concluded on the basis of a production sharing agreement (PSA).

The new type of contract will allow SOCAR to increase the volume of its energy resources, as international organizations evaluate oil and gas companies in terms of their reserves, and a new type contract will allow SOCAR to increase own assessment.

The deep-bed gas reserves of the ACG are estimated at 300 billion cubic meters.