Azernews.Az

Azerbaijan’s state energy firm SOCAR and Germany’s UGE-Lanser signed a production sharing agreement in Baku on Thursday to develop the country’s two onshore oil fields.
UGE-Lanser holds a 75% stake in the project on developing the 16.14 square kilometers block comprising Balakhany-Sabunchu-Ramana and Kurdakhani fields, while SOCAR’s Joint Oil Company - 25%, according to SOCAR President Rovnag Abdullayev, who co-signed the deal.
The contract on rehabilitating and operating the block was signed for 25 years, but it can be further extended for another five years.
Speaking about investments to be channeled into tapping the oil fields and bonus fees, Abdullayev said $2 billion will be paid to Azerbaijan in bonuses on the date the agreement goes into effect. Within the following 90 days, when daily production rises by 50 percent, another $2 million will be transferred.
As for investments, the SOCAR president said that, "according to existing experience, several hundred million dollars of investments will be required."
UGE-Lanser CEO Lothar Tauschke, another co-signatory of the PSA, said his company has been cooperating with SOCAR for five years and has been involved in the implementation of numerous environmental projects in Azerbaijan’s energy sector.
The Balakhany-Sabunchu-Ramana field has been operated since 1871. 9,549 wells have been drilled at the field, which has produced 271 million tons of oil so far. The field’s remaining recoverable reserves are estimated at 7.3m tons. 208,000 tons of oil were extracted at Balakhany-Sabunchu-Ramana in 2009. 1,124 operating wells and 328 wells that are at a standstill are currently available at the deposit.
The Kurdakhani field is located 8 km north of the Balakhany-Sabunchu-Ramana field. Geological surveys and exploration work were carried out there in 1914-1947. As of January 1, 2010, 59 wells have been drilled at the field and 198,000 tons of oil produced. Recoverable reserves are estimated at 205,000 tons. The field produced 730 tons of oil in 2009.*