SOCAR

SOCAR 'slipped' on Muradkhanli field

British oil company Ramco Energy announced of suspension of its activity on Muradkhanli project.

As was known from sources in London, Ramco decided not to participate further in development of Muradkhanli oil field due to ruined hopes to discover large oil reserves here reported Russian news agency ITAR-TASS.

The field is one of the few onshore fields. Ramco has invested over $25 million in its exploration and geological drilling (according to Azerbaijan experts the company's expenses total to a maximum of $10 million - author's note), however the obtained results indicate of commercial non-viability of oil production here stated the company employees in the interview by the reporter of ITAR-TASS.

As SOCAR stated to Media-Press, the meeting of Muradkhanli Operating Co shareholders shall be held in Baku on 9 April, 2001. That is where the decision on expediency of drilling the second well on the field will be made. The shareholders of the company are as follows: SOCAR - 50%, Ramco - 50%. Just to remind you, previously SOCAR was producing up to 3000 thousand tonnes from Muradkhanli and Ramco committed to increase current production level through applying special methods of drilling.

Some independent expert feel that Ramco's attitude to Azerbaijan projects is rather that of a fund broker than an oil company's. Small British company was the first one to enter the oil complex of the republic after it gained independence and as a result of its broker efforts was represented in the contract of century in September 1994 with the equity of 2.085%. However by the middle of 2000 Ramco managed to sell its equity in Azeri-Guneshli-Chirag project at very good price ($150 million).

By entering MEP Sponsor Group in October 2000 with equity of 1.55%, Ramco most probably was aiming to sell these shares at higher prices to big oil companies in the next years, when the pipeline is about to be put in operation.

SOCAR is not rushing to enter new PSA's

SOCAR is not yet preparing new PSA type contracts for signing despite the offers from foreign companies as Ilham Aliyev, First Vice-President of SOCAR, to Turan agency.

According to him it's worth pausing the process of entering new contracts. This is caused by lack of infrastructure for exploration and development of the prospective structures, specifically of drilling rigs (currently in Azerbaijan there are operated only three modern rigs such as Dede Gorgud, Istiglal and Gurtulush - author). 'However, it does not mean freezing the contracts as there is interest for our structures. But the level of activity will not reach that of 1996-97. Now we need to finalise exploration stages, discover the fields and produce oil and gas' - stressed Aliyev.

As for Iran's intention to develop structures with an area of 20% of Southern Caspian, First Vice-President of SOCAR noted that in that case Iran is intruding not only in Azerbaijan, but also Turkmenistan fields. 'It's not worth paying attention to such statements as before Iran also concluded contracts on Caspian structures with foreign companies, but never got to actual developments' - noted Aliyev.

SOCAR plans to pump 135 thousand tones of oil through Baku-Novorossiysk pipeline in April

State Oil Company of Azerbaijan Republic is planning to export 135 thousand tonnes of oil through Baku-Novorossiysk pipeline in April.

According to Vice-President of Transneft Joint-Stock company (the operator for transportation of Azerbaijan crudes through the territory of Russian Federation - author) Mr. Sergey Grigoriyev, the company already received SOCAR's application for pumping the mentioned volume of oil.

As announced earlier, in June SOCAR is planning to increase the volume of oil transported via Baku-Novorossiysk route to 200 thousand tones, thus total volume for first six months will reach 850 thousand tones of oil.

Since December 2000, when Azerbaijan started importing Russian natural gas, SOCAR gained the opportunity to gradually increase the volumes of crude oil export. Although export of oil through northern route cost Azerbaijan 5 times more than Western route, SOCAR has to transport its oil through Russia. The reasons for that are: firstly, Government of Azerbaijan must fulfill its commitments under Intergovernmental agreement of 18 January 1996 on transportation of Azerbaijan oil through the territory of Russian Federation; secondly the capacity of Baku-Supsa oil pipeline does not allow yet transportation of both AIOC and SOCAR crudes at the same time.

Dynamics of oil export via northern route for first six months of year 2001

Months	Volume (thousand tonnes)
January	75
February	130
March	145
April	150*
May	150*
June	200*
Total	850

Note: * -SOCAR forecast data

in June SOCAR is planning to increase the volume of oil transported via Baku-Novorossiysk route to 200 thousand tones, thus total volume for first six months will reach 850 thousand tones of oil.

SOCAR sent Muradkhanly Operating Company notification of non-compliance by the latter with its contractual obligations.

SOCAR sent Muradkhanly Operating Company notification of non-compliance by the latter with its contractual obligations. This was announced to journalist by president of SOCAR Natig Aliyev. MOC is responsible for development of the structure of onshore fields - "Muradkhanli", "Jafarli" and "Zardab".

Under PSA contract between SOCAR and Ramco within 2 years this British Company have to increase oil production 1.5 times in comparison with the parameters for 1997, however failed to accomplish that.

Besides the three year exploration period of the contractual area provided for conduct of 3D seismic survey and drilling of 2 exploration wells on prospective structures included into contractual area.

The only well drilled in Muradkhanli during the MOC activity was killed according to information distributed by Ramco company, due to the data that indicated non-viability of well development.

It should be noted, that Muradkhanli field was discovered in 1969 and is located 110 miles south of Baku. The peak of oil production was reached in late 70's when production volume constituted 1.2 thous. tonnes/day, however at the time of signing the PSA in 1998 there was a significant drop in production from the field - 110 thous. tonnes/day.

* The contract between SOCAR and Ramco Energy for exploration and development "Muradkhanli", "Jafarli" and "Zardab" fields was signed in London on 21 of July 1998. The contract was ratified by Milli Majlis on 20 November, 1998.

Amirov Oil and Gas Production Department (OGPD) plans to increase gas supply to Salyan

On Bandavan field a new 1460 metter deep gas well number 29 was put into operation. As SOCAR informed Turan, the daily flow rate of this well is about 25 thousand cubic meter of gas

In the beginning of 2000, after this field was transfered on the balance of Ali Amirov OGPD the area was newly mapped and significant gas reserved on the big area at the depth of 1200-1500 meters. On this basis it was decided to drill new gas wells here in order to improve gas supply to the population of Salyan.

At present OGPD specialists have already completed construction of gas pipeline connecting well N-29 with manifold for gas supply to Salyan. It is expected that with commencment of operation of well N-29 supply of gas to Salyan will increase 1.5 times. Besides in the nearest time, in this area it is planed to start drilling new gas well N-30 and then well N-31 each with designed depth of 1460 meters.

"Azerneftyag" extended the terms for submission of bids for the tender on procurement cables and electric equipment.

"Azerneftyag" (SOCAR's oil refinery producing lubricants) extended deadline for submission of tender bids for 3rd lot (procurement of cables analytic equipment) of the tender for procurement for goods and materials to satisfy the demands of the production association for year 2001.

The reason for extension of deadline was submission of bids from only one company, which contradicts the low on tender (must be minimum of 3 companies) the envelopes with the bids will be opened at 15:00 on 17 April.

* On 22 February "Аzernefyag" PA announced tender for procurement of goods and materials. Tender is split in 4 lots:

- lot 1 - pumps, valves, compressors, elbow joints;

- lot 2 - metal plates, tubulars, channel, angle, reinforcement bars and welding rods;

- lot 3 - cables and electric equipment;

- lot 4 - construction materials and equipment

New offshore platform is constructed in "Darwin Bank" field.

In May of this year it is planned to put in operation a new platform N-210 in Darwin Bank field (Absheronneft OGPD).

According to the SOCAR statement to Turan the platforme is installed at water depth of 14,5 meters. Its consists of 10 jackets, 8 of which have already been taken out and installed in designed area. Remaining 2 jackets are ready hookup of those requires the tubulars and still work for the amount of 1.5 billion manats.

According to SOCAR's specialists the platform will be put into operation as scheduled provided materials are supplied on time. This year from the platform there will be drilled 4500 meters which constitutes 40% of annual plan of "Pirallakhi" (drilling contractor of "Absheronneft" OGPD).

At the same time the management of "Offshore oil and gas production" PA within SOCAR issued a directive for construction of new platform N-660 in the same offshore every. It will be installed at water depth of 8-10 meters, and depth of the wells will not exceed 1500 meters. Daily flow rate of the wells will be about 15-20 tonnes of oil. Recovereble oil reserves of this fields are 2,6 mln tonnes.

As SOCAR noted, commencement of operation of the new wells enabled "Аbsheronneft" OGPD to stabilize the level of oil production. If in 1992 OGPD produced 250 tonnes/day at present it produces 410 tonnes and is planning to increase the daily oil production to 500 tonnes.