Statoil Sees Value in Small Caspian Fields

Norwegian Statoil has submitted to Azerbaijan’s energy ministry the results of its research into three minor offshore fields: Dan Ulduzu, Karabakh and Ashrafi.

Energy minister Natig Aliev said during a meeting with company representatives that the three fields could form the next wave of oil and gas projects. After the meeting, Aliev said new resources were needed to make use of infrastructure created by Azerbaijan and he urged Statoil to accelerate the work and move from the negotiation stage to signing a memorandum of understanding next year and a production-sharing agreement later.

Statoil’s Azerbaijan head, Karsten Stoltenberg, said that the application of modern exploration technology had led to more significant results than those that could be obtained in the late 90s. Stoltenberg told the ministry that geological boreholes were drilled and a 3-D seismic survey was carried out, and recoverable and existing oil and gas reserves were discovered in a much larger volume than in the original indicators. Nevertheless combined output is only likely to be 1.5bn m³/yr.

Azeri-Chirag-Guneshli: Statoil's main Caspian project

(Credit: Wood Group)

Socar also expects to attract foreign companies to the development of other promising structures, Nakhchivan and Zafar Mashal. At the same time, the company does not exclude the possibility of developing the structures of Karabakh, Dan Ulduzu and Ashrafi in one block.

Production-sharing agreements signed in the 1990s were terminated as the reserves were not economic in the low-price environment.

The Karabakh field was discovered in 1998 with reserves of 20bn m³ of gas and 20mm mt of condensate. It is 120 km east of Baku and 23 km north of the Azeri field and between 1996-1999 it cost the US operator Pennzoil $128mn.

UK major BP found the Ashrafi field with reserves of 13bn m³ of gas and 17mn mt of gas condensate in 1999. It is 105 km northeast of Baku, west of Karabakh. The operator of the project was the British-American BP-Amoco.

The Dan Ulduzu field is located west of the Ashrafi field, 85 km from Baku. In 1998-1999, two exploration wells were drilled to a depth of 3,100 m. The first well opened a reservoir of hydrocarbons, both gas and condensate, however in small volumes. The second well was empty. The latter two fields soaked up $100mn.

Azerbaijan desk