Azerbaijan International

Spring 1998 (6.1)
Pages 91-93


AIOC - Oil in Azerbaijan

by Tamam Bayatly

First AIOC Oil Lifted at Russian Port
On March 24, 1998, the first tanker loaded with 80,000 tons of AIOC oil was lifted by AIOC's shareholders at Novorossiysk, a port city on the Black Sea coast of the Russian Federation. This is the oil which AIOC began to produce from the Chirag-1 platform on November 7, 1997. From AIOC's perspective, it signified a new stage in the implementation of the "Contract of the Century" which was signed in September 1994 between 11 major foreign oil companies and SOCAR to develop the Chirag, Azeri and deepwater Gunashli oil fields in the Azerbaijan sector of the Caspian Sea. For the remaining months of 1998, AIOC plans to lift 2-3 tankships each month for a total volume of about 1.5 million tons.

Northern Pipeline
The Northern Pipeline through Russia, by which AIOC-produced oil is being transported to Novorossiysk, has been operational since October 25, 1997, when the first barrels of Azerbaijan oil were pumped across the border into the Russian section of the pipeline. AIOC's first oil crossed the Russian-Azerbaijan border on February 28, 1998, where it was handed over through the AIOC-operated metering station at Shirvanovka to the Russian joint stock company Transneft, the company authorized by the Russian Federation to implement terms and conditions of the intergovernmental agreement for transit of Azerbaijan oil across Russia to Novorossiysk.

The original agreement for transport of this oil was signed between SOCAR and the Russian Federation on January 18, 1996. The work performance has been excellent, enabling almost uninterrupted transportation of oil from Baku to Novorossiysk, providing evidence of the viability and economic effectiveness of the Northern pipeline.

Close cooperation and mutual understanding among experts from SOCAR, AIOC and Transneft have made it possible to implement all transit agreements, and parties have confidence that they will successfully meet their obligations under the existing agreements

Production Status
The contract for the oil field development is being carried out according to the schedule of the planned works. AIOC currently has three operational production wells at the Chirag field with the daily production volume of about 4,860 cubic meters (30,560 bpd). AIOC spudded its fourth production well on March 25.

First Caspian Environmental Lab
The Caspian Environmental Laboratory (CEL) has been established to provide environmental services in Azerbaijan on a commercial basis, thereby assisting government and industry in developing Caspian specific environmental standards during the process of industrial and economic redevelopment. This will be the first laboratory in the Caspian region provided with Western equipment and methodology. The staff is comprised of both national employees as well as experts from Western companies.

The opening ceremony took place at the AIOC office "Villa Petrolea" on March 11, 1998, and was attended by Faramaz Magsudov, Academician and President of the Academy of Science; Ali Hasanov, Chairman of the State Ecology Committee; Asya Manafova, Chair of the Parliamentary Standing Commission for Energy and Ecology; Einar Tresselt, AIOC's VP for Health, Safety and Environment along with representatives of SOCAR, AIOC, the International Ecoenergy Academy and other relevant institutions.

AIOC initiated the environmental lab, since part of their production sharing agreement (PSA) is to develop Caspian toxicity procedures for drilling muds. The services provided by the lab encompass the full range of environmental testing requirements for the oil industry. The project is a partnership between the International Ecoenergy Academy and Environment and Resource Technology (ERT).

AIOC's New President
David Pritchard became the President of AIOC on January 1, 1998. He replaced Terry Adams, the founding President of AIOC, who has since retired after holding that position since January 1995.

Pritchard served as president of BP Azerbaijan since October 1, 1996, when BP Azerbaijan Assets moved from Uxbridge in the UK to Baku. He previously served as President of the Alyeska Pipeline Service Company in Anchorage, Alaska, the consortium that operates the 1,300 km Trans-Alaska pipeline.

During a 30-year career with SOHIO and BP, he has held operational, engineering and management assignments in the Middle East, Alaska and other U.S. locations. Of particular note, in the early 1980s he managed the development of the Endicott oilfield, the first offshore production in the Arctic Ocean. From 1991 until 1993 he managed BP's interests and operations in Prudhoe Bay in Canada, the largest oil field in North America.

Pritchard lives in Baku with his wife, Anita. He holds an MA degree in Mechanical Sciences from Cambridge University. Anita, a native of Sweden, is a psychologist by profession and holds a Doctor of Philosophy degree from the University of Oklahoma. She was extensively involved in wildlife rehabilitation in Alaska. In Baku, she volunteers at an orphanage in Ganjlik.

AIOC Public Meetings
AIOC held two public forums in February of this year to present the findings of two environmental impact assessments (EIA) for AIOC's Northern and Western route pipeline systems. The meetings enabled AIOC to hear and act upon community concerns and expectations regarding the implications of these projects to the environment.

Before initiating construction on either route, AIOC had conducted EIAs for both projects. The first step involved identifying key environmental issues through numerous meetings with representatives from the State Committee on Ecology, SOCAR, and the local scientific community. The EIAs focused on such issues as the protection of water resources, soils, flora, hydrology, fauna, genetic fund and cultural heritage.

These meetings impacted the decision to re-route the pipeline north of Akstafa rather than following the route originally planned for the Western Route Export Pipeline (WREP), which traversed as a semi-circle around the southern side of the city. Information generated during the course of the EIA process alerted AIOC to the presence of a northerly sloping aquifer underneath the city. Though unlikely, should an accidental spill ever occur, the oil could contaminate the city's water supply as it entered the groundwater and flowed north under the city. AIOC's decision to alter the route significantly lessens the impact from any potential oil spills.

The Institute of Archaeology and Ethnology has also been consulted in regard to the WREP. They identified three significant sites including the medieval trading city of Shamkir, the cemetery located near the Nagorno Karabakh irrigation channel, and the hilly sites near Akstafa. At other archaeological sites located in close proximity to the WREP, archaeologists did excavations and evaluated the importance of the sites before any pipeline was laid.

Technical Library at SOCAR
AIOC handed over the "keys" of a newly refurbished and equipped technical library to the GIPROMORNEFTEGAS Institute of SOCAR on the day of AIOC's Third Anniversary (December 12, 1997). The library is located in the Institute building. The refurbishment and provision of the new equipment was carried out in conjunction with the SOCAR Institute.

The library contains technical books, international technical specifications and translations of oil industry standards into Russian. The library is equipped with computers, a copy machine and air conditioners.

The standards translation is still an ongoing exercise. The order of translations will be matched with the needs of the oil and gas industry as we see it developing with the Chirag-1 platform now operational, the pipeline system and the onshore terminal commissioned.

(Ms.) Tamam Bayatli is Communications Coordinator for AIOC.

From Azerbaijan International (6.1) Spring 1998.
© Azerbaijan International 1998. All rights reserved.

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