Socar, BP Ink Contract for Caspian Block: Update

(Updates, with BP comment on expectations, para 2)

Azerbaijan's national oil company Socar and BP signed a production-sharing agreement (PSA) for the joint exploration and development of Block D230 in the North Absheron basin in the Azerbaijan sector of the Caspian Sea, they said April 26. The agreement is to last for 25 years and the shares split equally, with BP the operator.

BP told NGW that its knowledge of the basin leads it to expect oil. "We believe that oil potential is mainly located around the margins of the Caspian basin offshore Azerbaijan, whereas gas exploration potential is in the central parts of the basin," it said.

The PSA was signed in London by Socar president Rovnag Abdullayev and his BP counterpart, Bob Dudley.

Abdullayev said: “We have a long tradition of successful co-operation with BP. I believe that the synergies between modern upstream technology and unique historical experience, embodied at both companies, create a solid foundation for our continued success. Being based on fair and equal conditions, today’s agreement will become an important milestone in the pursuit of the highest degree of efficiency in the joint development of the hydrocarbon resources of Azerbaijan.”

Dudley said: “This agreement underpins a new joint effort by Socar and BP to explore further Caspian opportunities in support of long-term production in Azerbaijan. We have now been operating in the region for more than 25 years and believe there is still significant oil and gas potential there. We look forward to continuing to build on our significant business in Azerbaijan, working closely with Socar and others to explore and help secure the Caspian’s future for decades to come.”

Block D230, 135 km northeast of Baku in the Caspian Sea, covers some 3,200 km² and has not previously been explored. It has water depths of 400-600 metres and anticipated reservoir depths of about 3,500 metres. The signing of the PSA follows the memorandum of understanding for exploration of Block D230, which was agreed in May 2016. Since then the two have extended the 1994 PSA for the Azeri-Guneshli-Chirag fields (pictured above, credit Wood Group) by another 25 years, to 2049. The three fields have produced over 3.3bn barrels of oil so far.