Azernews.Az

By Nigar Orujova

Azerbaijan's state energy company SOCAR and Norway's Statoil signed a Memorandum of Understanding on prospective structures Zafar and Mashal in the Azerbaijani sector of the Caspian Sea in Baku on Monday.

The memorandum, which was signed by SOCAR head Rovnag Abdullayev and Statoil chief executive Helge Lund, envisions holding talks, coordination of the main commercial principles and requirements of a contract on exploitation, and conclusion of the contract within one year after the signing of the memo.

According to Abdullayev, Statoil has been a participant of major oil and gas projects in Azerbaijan for 20 years, and new directions of cooperation will boost the relations between the two companies.

According to Lund, in past years Statoil gained new experience of work in Brazil and Tanzania, and now the company is ready to share this experience with SOCAR, and to use SOCAR's experience as well.

The first contract for the development of the Zafar and Mashal offshore structures was signed between SOCAR and US ExxonMobil on April 27, 1999. SOCAR had a 50 percent equity stake and ExxonMobil had 30 percent. In 2000, the remaining 20 percent was transferred to US firm ConocoPhillips.

Investment in the project was estimated at $2 billion and the predicted oil reserves at 140 million tons, of which 100 million accounted for Zafar and 40 million for Mashal.

The contract was revoked after the discovered hydrocarbons were deemed commercially unattractive.

SOCAR geologists estimate reserves on these structures at 300 billion cubic meters of gas and 37 million tons of condensate.

The Zafar and Mashal fields are situated 130 kilometers southeast of the capital Baku and were opened in 2004. The fields had been discovered as a result of seismological work in 1961.

Statoil participates in the projects on developing Azerbaijan's major oil and gas fields Azeri-Chirag-Gunashli and Shah Deniz, as well as Alov, Araz and Sharg deposits. It is also a partner in the Baku-Tbilisi-Ceyhan (BTC) oil pipeline, which runs from the Azerbaijani capital of Baku to the Turkish port of Ceyhan on the Mediterranean.