Azerbaijan launches $6bn oil project
Azerbaijan’s state oil company SOCAR and the BP-run
consortium AIOC signed an agreement in Baku on Tuesday sanctioning
investment worth $6 billion in a new oil project aiming to increase
oil production from the giant Azeri-Chirag-Gunashli (ACG) field in
the Caspian Sea.
SOCAR President Rovnag Abdullayev told the signing ceremony that the Chirag Oil Project (COP) will allow recovery of an additional 360 million barrels of Azeri Light oil at ACG, which is tantamount to tapping a giant new oil field.
Abdullayev said new technologies and equipment unprecedented for oil production in the resource-rich Caspian basin will be used during the project implementation, which will maximally extend the period of stable output amounting to about 1 million barrels per day.
Partners in the project expect daily output from the western side of Chirag to reach 183,000 barrels of oil and 6.4 million cubic meters of gas.
Analysts say that if the oil price is estimated at $60 a barrel, the ACG partners will receive profits totaling $16 billion, with Azerbaijan’s share constituting $12.5-13 billion of the amount.
The SOCAR president noted, further, that investments to the tune of $38 billion have been channeled into Azerbaijan’s oil sector so far, with over $20bn of the amount spent on the ACG project.
According to him, for the first time in the history of Azerbaijan’s cooperation with foreign oil companies, the entire bulk of construction operations will be carried out in Azerbaijan, generating 1,800 jobs for the country’s citizens.
"Today’s event is a step forward towards realization of Azerbaijan’s energy production growth plans aimed at positioning the country as one of the major suppliers to the world’s oil markets. We believe the project’s immediate benefits are even more valuable to us because for the first time the project’s world class multi-billion dollar facilities will be fabricated inside the country fully utilizing local resources," Abdullayev said.
Rashid Javanshir, BP Azerbaijan President, said 40m tons of oil were extracted from the ACG field in 2009, and the COP project will allow to increase output.
"This project was jointly developed by BP Azerbaijan and SOCAR, and it is different from other projects. I hope that cooperation between the sides will be continued with other projects," Javanshir said.
The COP construction work is scheduled to begin this June. By the fourth quarter of 2012, construction operations are to be completed and drilling launched. First oil from the COP, the latest stage in ACG’s development stretching back more than 15 years, is expected in late 2013.
According to Ilgar Mammadov, the project manager, a new offshore facility, Western Chirag, will be installed between the existing Deepwater Gunashli (DWG) and Chirag-1 platforms.
The ACG Production Sharing Agreement (PSA), known as "the Contract of the Century", was signed in September 1994 and covers the 30-year development of the ACG contract area. Potential ultimate recovery from the field is estimated at over 5bn barrels of oil - a super-giant field on any global basis.
To date, about 1.4bn barrels, or 188m tons of oil, has been produced from the field. The maximum production level of 1m bpd is expected in 2014-2018.
BP holds the largest stake in ACG with 34.1 percent, alongside partners including SOCAR, Exxon Mobil, Chevron, Devon Energy, and Turkey's TPAO.
Chinese corporations have expressed an interest in buying the 5.6 percent stake owned by Devon Energy, a source close to negotiations told Reuters on Tuesday, on condition of anonymity.
The source said proposals by China's CNOOC Ltd and Sinopec Corp, or China Petroleum & Chemical Corporation, had beaten other bids and that the companies had "a real chance to become owners of the stake."
The situation might be clarified within two months, the source said, adding that Devon had also offered its stake to existing members of the consortium as well as other companies.
Devon said in January that it planned to complete the sale of assets outside its core North American onshore business by the third quarter of this year.
The giant ACG deposit is the main source of oil for the BP-operated Baku-Tbilisi-Ceyhan (BTC) pipeline, which ships 850,000 bpd from the Caspian Sea to the Mediterranean.
Azerbaijan's crude oil production rose 13.5 percent year-on-year in 2009 to 50.376m tons. The government says it expects to produce 55m tons, or 1.1m bpd, of oil in 2010.
14 foreign oil and gas companies are currently operating in Azerbaijan, and over 20 contracts have been signed with foreign energy majors since 1994.*
SOCAR President Rovnag Abdullayev told the signing ceremony that the Chirag Oil Project (COP) will allow recovery of an additional 360 million barrels of Azeri Light oil at ACG, which is tantamount to tapping a giant new oil field.
Abdullayev said new technologies and equipment unprecedented for oil production in the resource-rich Caspian basin will be used during the project implementation, which will maximally extend the period of stable output amounting to about 1 million barrels per day.
Partners in the project expect daily output from the western side of Chirag to reach 183,000 barrels of oil and 6.4 million cubic meters of gas.
Analysts say that if the oil price is estimated at $60 a barrel, the ACG partners will receive profits totaling $16 billion, with Azerbaijan’s share constituting $12.5-13 billion of the amount.
The SOCAR president noted, further, that investments to the tune of $38 billion have been channeled into Azerbaijan’s oil sector so far, with over $20bn of the amount spent on the ACG project.
According to him, for the first time in the history of Azerbaijan’s cooperation with foreign oil companies, the entire bulk of construction operations will be carried out in Azerbaijan, generating 1,800 jobs for the country’s citizens.
"Today’s event is a step forward towards realization of Azerbaijan’s energy production growth plans aimed at positioning the country as one of the major suppliers to the world’s oil markets. We believe the project’s immediate benefits are even more valuable to us because for the first time the project’s world class multi-billion dollar facilities will be fabricated inside the country fully utilizing local resources," Abdullayev said.
Rashid Javanshir, BP Azerbaijan President, said 40m tons of oil were extracted from the ACG field in 2009, and the COP project will allow to increase output.
"This project was jointly developed by BP Azerbaijan and SOCAR, and it is different from other projects. I hope that cooperation between the sides will be continued with other projects," Javanshir said.
The COP construction work is scheduled to begin this June. By the fourth quarter of 2012, construction operations are to be completed and drilling launched. First oil from the COP, the latest stage in ACG’s development stretching back more than 15 years, is expected in late 2013.
According to Ilgar Mammadov, the project manager, a new offshore facility, Western Chirag, will be installed between the existing Deepwater Gunashli (DWG) and Chirag-1 platforms.
The ACG Production Sharing Agreement (PSA), known as "the Contract of the Century", was signed in September 1994 and covers the 30-year development of the ACG contract area. Potential ultimate recovery from the field is estimated at over 5bn barrels of oil - a super-giant field on any global basis.
To date, about 1.4bn barrels, or 188m tons of oil, has been produced from the field. The maximum production level of 1m bpd is expected in 2014-2018.
BP holds the largest stake in ACG with 34.1 percent, alongside partners including SOCAR, Exxon Mobil, Chevron, Devon Energy, and Turkey's TPAO.
Chinese corporations have expressed an interest in buying the 5.6 percent stake owned by Devon Energy, a source close to negotiations told Reuters on Tuesday, on condition of anonymity.
The source said proposals by China's CNOOC Ltd and Sinopec Corp, or China Petroleum & Chemical Corporation, had beaten other bids and that the companies had "a real chance to become owners of the stake."
The situation might be clarified within two months, the source said, adding that Devon had also offered its stake to existing members of the consortium as well as other companies.
Devon said in January that it planned to complete the sale of assets outside its core North American onshore business by the third quarter of this year.
The giant ACG deposit is the main source of oil for the BP-operated Baku-Tbilisi-Ceyhan (BTC) pipeline, which ships 850,000 bpd from the Caspian Sea to the Mediterranean.
Azerbaijan's crude oil production rose 13.5 percent year-on-year in 2009 to 50.376m tons. The government says it expects to produce 55m tons, or 1.1m bpd, of oil in 2010.
14 foreign oil and gas companies are currently operating in Azerbaijan, and over 20 contracts have been signed with foreign energy majors since 1994.*
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