From our local energy advisor Nargiz Mehdiyeva

SOCAR, to sign 2 deals on fields in BP to start exploration drilling on 2 contracts in Azerbaijan in 2019 BP announces start of drilling of first well in shallow waters of Absheron Peninsula BEOC preparing contract for drilling deep well in Absheron field development programme update

SOCAR, Equinor to sign 2 deals on fields in Azerbaijan , Azerbaijan, 30th May 2018 Azerbaijan’s state oil company SOCAR and the Norwegian Equinor will sign two agreements as part of the 25th International Caspian Oil & Gas Exhibition and Conference in Baku May 30. In particular, a risk-service agreement on the Karabakh field and a production sharing and exploration agreement on the Dan Ulduzu, Ashrafi and Aypara promising structures will be signed. The agreements envisage a 50/50 share distribution. The contract for developing Ashrafi – Dan Ulduzu block of structures, signed in 1997 between SOCAR (20 percent), BP (30 percent), Unocal (25.5 percent), Itochu (20 percent) and Delta HESS (4.5 percent), lost validity on March 7, 2000. Hydrocarbon reserves in the amount of 20-40 million tons were discovered at the Ashrafi field. Initial oil reserves of the Karabakh oil and gas field, discovered in 2000, amount to 100 million tons. SOCAR operates Karabakh field’s development.

BP to start exploration drilling on 2 contracts in Azerbaijan in 2019 Baku, Azerbaijan, 30th May 2018 In 2019, BP will start exploration drilling on two contracts signed with Azerbaijan, BP Regional President for Azerbaijan, and Gary Jones said at the 25th International Caspian Oil & Gas Exhibition and Conference in Baku May 30.

The contracts envisage drilling at the Shafag-Asiman block of fields and the shallow water area around the Absheron Peninsula, he said. Speaking about the Shafag-Asiman structure, Jones noted that exploration drilling at this block is scheduled to begin in mid-2019. “By early 2012 the Gilavar seismic vessel completed the planned 3D seismic acquisition on the structure, the first 3D seismic conducted over the contract area,” he said. “The data was then processed in Azerbaijan, the largest 3D survey processed in-country. Our teams are now planning an exploration well, with the view to start drilling in mid-2019. If we make a commercial discovery, this can be the next Shah Deniz.” Gary Jones also spoke about the work regarding the potentially promising structures in the shallow water area around the Absheron Peninsula. “In October 2017, after interpreting the seismic data, BP and [Azerbaijan’s state oil company] SOCAR agreed to drill exploration wells in three prospective areas,” he said. “So now our teams are working on well planning, with the aim to start drilling in early 2019.” SOCAR and BP signed a contract on the Shafag-Asiman block of fields for a period of 30 years in October 2010. The exploration period is four years with possibility of extension for three more years. Two wells are to be drilled within the first phase. Two more wells will be drilled within the second phase, if necessary. In the operational period the sides will implement joint operatorship within the project. Shared participation in the contract between BP and SOCAR is 50 to 50 percent. The forecasted reserves of the Shafag-Asiman block stand at 500 billion cubic meters of gas and 65 million tons of condensate. The block is located 125 kilometers to the south-east of Baku. Exploration work has not been conducted on the block yet. It is located at a depth of 650-800 meters with the depth of the reservoir at 7,000 meters. The contract for exploration and development of potential structures in the shallow waters of the Absheron Peninsula was signed in December 2014 between SOCAR and BP Company and was ratified in April 2015. The territory covered by the agreement extends along the southern part of Absheron Peninsula and covers an area of about 1,900 square kilometers. On this territory, the depth of the sea is up to 25 meters, and the depth of the potentially productive strata - 3000-5000 meters. BP owns the 50 percent share in the agreement, and the other half is the share of SOCAR. The technical operator of the project is BP Company.

BP announces start of drilling of first well in shallow waters of Absheron Peninsula Baku, Azerbaijan, 7th May 2018 BP Company plans to start drilling the first well in the potentially promising structures in the shallow waters of Absheron Peninsula (SWAP) in early 2019, Vice-President for External Affairs of BP Company in Azerbaijan, Georgia and Turkey Bakhtiyar Aslanbeyli told reporters May 7. He noted that the company preparing for the start of drilling on contract areas. "The locations for the drilling of three wells have been chosen. They are in different zones in the contract area. This structure has good prospective reserves. Drilling is likely to start in early 2019, " Aslanbeyli said. The contract for exploration and development of potential structures in the shallow waters of the Absheron Peninsula was signed in December 2014 between the Azerbaijan state company SOCAR and BP Company and was ratified in April 2015. The territory covered by the agreement extends along the southern part of Absheron Peninsula and covers an area of about 1,900 square kilometers. On this territory, the depth of the sea is up to 25 meters, and the depth of the potentially productive strata - 3000-5000 meters. BP owns the 50 percent share in the agreement, and the other half is the share of SOCAR. The technical operator of the project is BP Company.

BEOC preparing contract for drilling deep well in Caspian Sea Baku, Azerbaijan,1st June 2018 Bahar Energy Operating Company Limited (BEOC), which is engaged in development of Azerbaijan’s Bahar and Gum Deniz oil and gas block, is working on a contract to drill a new gas well. BEOC continues to closely cooperate with the Integrated Drilling Trust of Azerbaijan’s state oil company SOCAR in connection with the partnership opportunities for drilling deep gas wells at the Bahar gas field, according to the source. “For this purpose, the reconstruction of a platform No. 196, which is a key one for future drilling, continues at the field,” the source said. “The work is underway to design a deep well No. 301 and the corresponding drilling contract.” The contract for exploration, rehabilitation, development and production at Bahar and Gum Deniz block of fields was signed by Azerbaijan’s state oil company SOCAR (20 percent) and Bahar Energy (80 percent) in 2009. Bahar field, developed since 1969, is located in 40 kilometers south-east from Baku. BEOC is wholly owned subsidiary of the US Greenfields Corporation.

Absheron field development programme update Baku, Azerbaijan,1st June 2018 In 2016 Azerbaijan’s state oil company SOCAR and Total signed a framework agreement on the main contractual and commercial principles regulating the program of the first phase development of the Absheron field. The first phase of the field’s development envisages drilling of one well at a sea depth of 470 meters. The production will stand at 1.5 billion cubic meters of gas per year and these volumes will be used in Azerbaijan’s domestic market. It is planned to produce up to 4 billion cubic meters of gas as the second stage. Absheron’s reserves are estimated at 326 billion cubic meters of gas and 108 million tons of condensate, according to the estimations of Total specialists. The Absheron project will be operated by JOCAP (Joint Operating Company Absheron Petroleum) (50 percent SOCAR, 50 percent Total).

News update compiled by Azerbaijan Energy advisor Nargiz Mehdiyeva