Azerbaijan to Sign Contracts for Two Fields
Azerbaijan is preparing to sign contracts by late 2016 with foreign companies for the development of the Umid and Babek gas fields, Vagif Aliyev, head of state oil and gas firm Socar's Investments Department, has told Natural Gas Europe.
He said that, for the first time, the contract on Umid field would not be on the basis of production sharing agreements (PSAs), but instead the contractor would be selected and investment could be made by Socar, the contractor or other companies on a similar basis to Iran's former 'payback' contractual model. He gave no further information about the expected value of the contracts.
Socar began deepwater exploratory drilling on the Umid Structure in Azerbaijan’s sector of the Caspian Sea in 2009, and in November 2010 the Umid gas-condensate field was discovered.
The results of drilling of the first exploration well showed that Umid's reserves were over 200bn m3 of gas and 40 million metric tons of condensate.
Socar investments chief Vagif Aliyev (Photo credit: Socar)
Socar started gas production from Umid in September 2012, at 1.5mn m3/d (0.55bn m3/yr), but this volume decreased by more than 50% to about 625,000 m3/d in 2014 due to what has been called the “complicated geological structure of field”. Umid is continuing to produce at a low level whereas Babek has yet to enter production.
According to preliminary data, the reserves of Babek perspective structure may amount to 400bn m3 of gas and 80 million metric tons of condensate.
Socar vice-president Khoshbakht Yusifzaheh told NGE in March 2015 that the company has announced a tender for development of Umid gas field and “we will consider the cost of drilling operations, namely the expenses of this appraisal well and other operations will be taken into in the contract”.
Yusifzadeh said that in case the drilling operation become successful, a new production platform will be installed there.
Gas produced from Umid is intended for the domestic market, while gas from Babek is earmarked for delivery to the western markets.
Azerbaijan desk