Chevron Meets with President Aliyev
Above: President Heydar Aliyev (left in front of microphones) recently met with Richard Matzke, Vice Chairman of the Chevron Corporation and his delegation.
On February 28, 2001, President Heydar Aliyev received a delegation from Chevron Corporation, headed by its Vice-Chairman Richard Matzke. During the meeting, they discussed the progress of exploration work on Absheron Offshore Block, of which Chevron is operator. Chevron also expressed its intention to participate in the engineering phase of the Baku-Tbilisi-Ceyhan (BTC) Oil Pipeline construction project. Chevron's interest in regard to accessing the BTC pipeline is related to the possible discovery of liquid hydrocarbons in the Absheron Block.
The Chevron group, which included its International Exploration and Production President, Peter Robertson, and two board members, also met with SOCAR's President Natig Aliyev, and Vice Presidents Ilham Aliyev and Khoshbakht Yusifzade.
The Absheron block is situated about 100 kilometers southeast of Baku at a depth of 520 meters. Drilling started on December 24, 2000 and is expected to reach the target reservoirs in May 2001. The projected total depth of the well is 6,700 meters.
There are various scenarios that could develop related to the potential hydrocarbon reserves of the Absheron structure. However, as the well is still in the exploration stage, the type and quantity of reserves can only be confirmed after drilling and evaluation has been completed.
Nevertheless, Chevron has decided to seek participation in the BTC engineering phase without waiting for the final results on Absheron as it expects that the negotiation of commercial terms and the preliminary technical work on such a large project as BTC will take considerable time. Chevron has expressed the intention to participate in both Basic and Detailed Engineering phases of the project and is in discussions with SOCAR regarding conditions for joining the Sponsor Group.
In January 2001, Chevron Overseas Petroleum Azerbaijan Limited, operating the Absheron PSA for Chevron, TotalFinaElf and SOCAR, signed a Rig Utilization Agreement (RUA) for the shared use of a new rig on the Absheron Block along with the Nakhchivan and Zafar-Mashal prospects, which are operated by ExxonMobil. Maersk Contractors of Denmark will build the new rig. Construction will be done partly in Singapore and the assembly will take place in Baku, with Caspian Shipyard Company, a joint venture of Keppel-Fels and SOCAR. This will be the first semi-submersible rig to be built in Azerbaijan this decade.
Total estimated investment during the exploration period on the Absheron block is about $200 million, of which about $120 million is the Chevron share. If commercial reserves of hydrocarbons are discovered, investments to develop the field will grow substantially.
Chevron and its partners have an Agreement on Exploration, Development and Production Sharing (EDPSA) on the Absheron block, which was signed August 1, 1997 and became effective December 5, 1997. Chevron has a 30% equity share in the Agreement and is the operator. Its partners are State Oil Company of Azerbaijan Republic (SOCAR) (50%) and TotalFinaElf (20%).
The agreement covers three years plus extensions for exploration and 25 years for development and production. Two exploration wells are required to be drilled under the contract. Drilling of the first well commenced in December 2000.
From Azerbaijan International (9.1) Spring 2001.
© Azerbaijan International 2001. All rights reserved.