Baku, Fineko/abc.az. The next step of the first  production sharing agreement (PSA) between BP and SOCAR on joint exploration and development of the Shafag-Asiman structure (D8 и D10) in the Azerbaijan sector of the Caspian Sea has been finished.  On 4 January the Caspian Geophysical finished holding 3D seismic at the block started in November 2011.

This is the first 3D seismic ever conducted on the contract area. It will be followed by data processing throughout 2012.  This processing is also taking place with Caspian Geophysical and will be the largest 3D survey ever processed in-country. Then some 18 months will be required for data interpretation and another year for planning of the first exploration well.

In general, BP Azerbaijan originally planned to begin drilling of the first exploration well on block of Shafag/Asiman structures by the end of 2016. For that it is needed to complete 3D seismic survey until the end of 2011. Another year is given to processing of the data and 1/5 year on their interpretation. Planning of the first well will take one more year.

Preliminary work schedule assumes processing of 3D survey data in 2012 and their interpretation – in 2013 - first half of 2014, starting term of first exploration well drilling - in second half of 2016 – early 2017.

The schedule takes into account sea depth in block area (650-950 m), depth of reservoir laying (7,000 m), necessity of work conduction technology.

According to BP estimations the probability of success in block survey is 25%.

Work is carried out within the oil & gas production sharing agreement (PSA) signed on 7 October 2010 by the SOCAR and BP Azerbaijan for exploration & development of structures Shafag and Asiman (earlier they bore notations D8 and D10) in Azerbaijani sector of the Caspian Sea. The agreement was first ratified in June 2011.

Earlier SOCAR first vice-president Khoshbakht Yusifzadeh announced that the beginning of 3D seismic survey on the block since 15 September.

By order of BP this work will be carried out by Caspian Geophysical with use of vessel Gilavar.

According to vice-president’s estimates, block reserves are 500 billion cu m of gas and 40 million tons of condensate. Exploration will be conducted under difficult conditions - at water depth of 750 m. Expected depth of wells will exceed 7 000 m.

Under the contract, within 30 days after its entry into force of BP Exploration should pay a bonus of $20 million to Azerbaijan. If the exploration program confirms oil reserves, then a bonus for every 100 million barrels will be $1 million. After the beginning of commercial development on the block for 3 months it should pay a bonus of $50 million. In addition, BP should carry out annual acre payments to Azerbaijan in the amount of $2,000 per 1 sq km of the contract area.

The contract with BP offers equity stake parity (by 50%) to transform into joint operatorship by the period of development.

The PSA is designed for 30 years with a possibility of extension by another five years. Mandatory exploration period is 4 years, during which the contractor must drill at least 1 exploration well, and one well within the mandatory period may be drilled by mutual agreement of the parties. The exploration period can be extended for another 3 years to drill 2 more exploration wells. Minimal geological exploration was conducted on the structures, and their current reserves are estimated in 500 bn cu m of gas and 65 million tons of condensate.

For Shafag /Asiman block development one needs to select technology for production of more than 7,000 m from wells under abnormally high pressure.

The two-structure block lies some 125 km (78 miles) to the south-east of Baku. Its covers an area of some 1,500 sq km and has never been explored before.

01.03.2012 14:03