Exploration of Caspian Sea prospect set
Western oil companies have secured an agreement on production sharing principles for the Shak Deniz prospect in the Caspian Sea.
The prospect, 70 km off the coast of Azerbaijan in 150-600 m of water, is said to have potential to hold more than 5 billion bbl of liquids.
The combine of BP Exploration Operating Co. Ltd. and Den norske stats oljeselskap AS signed the deal with State Oil Co. of Azerbaijan Republic (Socar) and Turkey's state owned Turkiye Petrolleri AO.
A BP official said negotiations over Shak Deniz started in 1992, when BP and Statoil signed a heads of agreement for development of the Chirag discovery and exploration of Shak Deniz.
The Shak Deniz deal has been on hold while Socar and Azerbaijan International Operating Co. (AIOC), of which BP-Statoil and Turkiye Petrolleri are partners, thrashed out a plan for an $8 billion development of Azeri, Chirag, and Guneshli fields (OGJ, Jan. 30, p. 31).
The BP official said that before any work can take place, the agreement requires approval by the president and government of Azerbaijan.
BP-Statoil has studied Shak Deniz seismic data acquired during the Soviet era. Early interpretations were said to have resulted in estimates of a 5 billion bbl prospect, but BP now refers to Shak Deniz as 'a large prospect."
Technically, Shak Deniz has not been drilled, said the official, because a well drilled on the prospect by the Soviets missed its target.
Once government has approved the production sharing principles agreement, the next stage will be to agree on a work program.
Timing of government approval and exploration work is hazy, although 1996 and 1997 have been put forward as likely dates for drilling.
The BP official explained there are enough seismic vessels active in the Caspian Sea to make a seismic program achievable in any program. Drilling will prove tougher, he said, because of a shortage of quality rigs in the area.
