BP has entered into production-sharing agreement (PSA) with Azerbaijan’s national oil company (NOC) SOCAR to explore and develop the offshore D230 block.
The binding contract was signed at a ceremony in London, attended by UK Prime Minister Theresa May and Azeri President Ilham Aliyev, as well as SOCAR president Rovnag Abdullayev and BP CEO Bob Dudley.
D230 spans 3,200 square km of unexplored territory in the North Absheron Basin, within Azerbaijan’s section of the Caspian Sea. It lies 135 km northeast of Baku, in water depths of between 400 and 600 metres. The site is believed to contain oil and gas within reservoirs some 3,500 metres deep.
“This agreement underpins a new joint effort by SOCAR and BP to explore further Caspian opportunities in support of long-term production in Azerbaijan,” BP’s Dudley said in a statement. “We have now been operating in the region for more than 25 years and believe there is still significant oil and gas potential there.”
Under the PSA, valid for 25 years, BP will operate the block with a 50% stake during the exploration phase, with SOCAR in control of the remaining 50%. The agreement builds on a memorandum of understanding (MoU) the pair signed to explore prospects jointly at D230 in May 2016.
BP is Azerbaijan’s biggest foreign investor. It leads international groups developing the Azeri-Chirag-Guneshli (ACG) offshore oilfields, responsible for around three-quarters of Azerbaijan’s oil production, and Shah Deniz, the country’s largest gas field. It also owns stakes in the transnational pipelines that pump oil and gas from these projects to market.
The British major is also exploring the Shafag-Asiman and Shallow Water Absheron Peninsula (SWAP) blocks off the coast of Azerbaijan. It has shot seismic surveys at both sites, and intends to launch drilling work next year.