WHEN THE ISSUE WAS MADE UP AZERBAIJAN CAN BECOME LARGEST GAS PRODUCER OF THE CASPIAN

JAOC TO CONFIRM SHORTLY DISCOVERY OF THE LARGEST GAS CONDENSATE FIELD IN AZERBAIJANIAN SECTOR OF THE CASPIAN

* Nexr week the Japanese Absheron Operating Company (JAOC) is going to confirm the discovery of largest gas condensate field in Azerbaijanian sector of the Caspian, CEW got to know from a confidential source in JAOC. Azerbaijanian experts think the said structure cannot give in for its reserve volume to Shah Deniz field, the other large Azerbaijanian field.

According to the information available, the reserves were discovered while drilling the second prospecting well at the promising Ateshgah structure. Well headway has been suspended at the mark of 5,000 meters (designed depth is 5,135 m).

JAOC is shortly to take a decision jointly with SOCAR whether they ashould go on with prospecting drilling . The officials of both the consortium and SOCAR yet refuse to report at least the approximate figures about the gas reserves discovered. It is noteworthy that the sinking of the 2nd well proceeded on the schedule and unlike the 1st prospecting well without any complications. The remaining 35 meters undrilled are explained by the fact that the drillers ran across a gas reserve. The drilling was performed from Qurtulush jack up rig. It is noteworthy that the 2nd well is located 20 km away of the 1st one which was drilled at Yanan Tava field and failed to show particular results. Then the drilling was done completely and ceased at the level of 4,715 meters down (designed depth was 5,050 meters) due to geological complications. By the way, the said well happened to be one of the most hard- sunk one among those the foreign companies ever drilled in Azerbaijan. Its headway that started on October 5, 2001 , was accompanied with regular stops caused by abnormally high pressure. Only the 1st well at the Muradkhanli- Cafarli- Zardob contract block can serve as an example of the kind, and it was drilled by British Ramco. The total area of the contract block consisting the Ateshgah- Yanan Tava - Mugan Deniz structures is 510 sq. km. The sea depth is varied from 20 to 100 meters and the productive layers have been revealed at the depth of from 2, 000 to 4,000 meters. The reserves of the area are estimated in 75 -90 mln tons of oil , while the required investment to the project make about $2.3 bln. The contract on the area was signed between SOCAR which got 50% production share and the consortium of Japanese oil companies on December 25, 1998. The Japanese consortium consists of JAPEX (operator of the project, 22.5% production share), Inpex (12.5%), Teikoku (7.5%) and Itochu (7.5%). The Japanese National Oil Corporation (JNOC0 came out asan organiser, risk insurance agent and financial guarantee which is to cover 50% of the consortiums expenditures. JNOC is to receive two thirds (66.6%) of the in come of all Japanese companies, the participants of the consortium. The validity period of the contracvt is 25 years, but upon agreement with SOCAR it can be extended another 5 years.

Thus, in case, the predicted estimation is confirmed Azerbaijan gets into the line of largest potential natural gas producers. This can bring corrections in the formation of the countries gas strategy aimed today at Shah Deniz gas potential and purchase of Russian gas which have already exceeded by 20% the gas production by AzNeft (SOCAR).

As is evident from the data cited below, on the volume of recoverable reserves of the blue fuel Azerbaijan can stand in line of the countries like Uzbekistan and Turkmenistan.

The said discovery may happen to be just at the right time to push the realisation of the Shah Deniz project, as well as the construction of the Baku-Tbilisi-Erzurum gasline construction project with further extention towards the European market via Turkey and Greece to Italy. The opportunities of Azerbaijan to take a place in the market of Europe will grow even more.

Reference: Russia recovers at present more than 585 bln c/m of gas a year, Uzbekistan produces 50 bln, Turkmenistan -45 bln and Kazakhstan -10 bln c/m.