Azerbaijan: Production-Sharing Agreements

Name of PSA	Project Partners	Estimated Reserves	Projected Investment	Project Status
Azeri, Chirag, and Deepwater Gunashli (Azerbaijan International Operating Company, AIOC) Signed Sept. 20, 1994; ratified December 1994	BP (34.1%, operator), Chevron-Texaco (10.2%), Lukoil (10%), SOCAR (10%), Statoil (8.6%), ExxonMobil (8%), TPAO (6.8%), Devon Energy (5.6%), Itochu (3.9%), Amerada Hess (2.7%)	6.5 billion barrels of oil and 140 Bcf of has	$20 billion	Exports began late 1997. AIOC expects 674,000 barrels per day (33 million tonnes pa) from the four platforms in total for the full year. Of this, 131,000 barrels per day is expected from Chirag, 239,500 barrels per day from Central Azeri, 177,500 barrels per day from West Azeri and 126,000 barrels per day from East Azeri.
Shah Deniz Signed June 4, 1996; ratified October 17, 1996	BP (25.5%, operator), Statoil (25.5%), SOCAR (10%), LukAgip (10%), TotalFinaElf (10%), OIEC of Iran (10.0%) TPAO (9.0%)	2.5 billion barrels of condensate; 22 Tcf (630 Bcm) of natural gas	Over $3 billion	Consortium plans to produce an average of around 63,000 barrels of oil equivalent per day (or 2.8 bn cubic metres of gas and 0.8 million tonnes of condensate for the entire year) during 2007. Plateau production from Stage 1 will be 8.6 billion cubic meters of gas per annum and approximately 45,000 barrels of condensate per day.
Lankaran-Talysh Signed Jan. 13, 1997; effective June 1997	TotalFinaElf (35%, operator), Wintershall (30%), SOCAR (25%), OIEC of Iran (10%)	700 million barrels of oil	$2 billion; $36.6 million invested by 2000	First test well (2001) came up dry.
Yalama/D-222 Signed July 4, 1997; ratified November 1997	Lukoil (80%), SOCAR (20%)	750 million barrels at Yalama field	$2.5-5.5 billion	Drilling to 4,400 meters failed to find commercial reserves. Lukoil does not plan to return to exploration drilling until 2008. Lukoil has a commitment with SOCAR to drill the second well.
Absheron Signed Aug. 1, 1997; ratified November 1997	SOCAR (50%); Chevron (30%, operator), TotalFinaElf (20%)	858 million barrels of oil; up to 100 Tcf of natural gas	$3.5 billion; $10.6 million invested by 2000.	Project closed. Chevron abandoned first exploratory well in 2001. In November 2003, Chevron and Total paid $40 million in compensation rather than drill a second well as required under contract.
Oguz Signed Aug. 1, 1997; ratified November 1997	ExxonMobil (50%, operator), SOCAR (50%)	290 million barrels of oil and 685 bcf of gas	$2 billion; $5.5 million invested by 2000.	Dry well drilled in April 2001. ExxonMobil announced plans to quit the project in April 2002.
Nakhchivan Signed Aug. 1, 1997; ratified November 1997	ExxonMobil (50%, operator), SOCAR (50%)	750 million barrels of oil	$2 billion; $22.5 million invested by 2000	ExxonMobil drilled onel well but decided not to take the risk of drilling the second exploration and will pay $18 million in compensation to Azerbaijan since no commercial hydrocarbons were found
Kurdashi-Araz- Kirgan Daniz Signed July 7, 1998; ratified July 1998	SOCAR (50%), Agip (25%, operator), Mitsui (15%), TPAO (5%), Repsol (5%)	730 million barrels of oil	$2.5 billion	First test wells drilled, with poor results. Italy's Agip paid compensation to Azerbaijan to be released from the PSA.
Inam Signed July 21, 1998; ratified December 1998	SOCAR (50%), BP (25%, operator), Royal Dutch/Shell (25%)	2.2 billion barrels of oil	$2 billion; $7.5 million invested by 2000	BP suspended drilling of its first appraisal well in Aug. 2001 due to high pressure. New well is planned to begin drilling when a rig currently digging the Shah Deniz field becomes available
Araz, Alov, and Sharg Signed July 21, 1998; ratified December 1998	SOCAR (40%), BP (15%, operator), Statoil (15%), ExxonMobil (15%), TPAO (10%), Alberta Energy (5%)	6.6 billion barrels of oil	$10 billion	In exploring phase in 2004. Confrontation with Iranian gunboat in July 2001; exploration suspended, pending resolution of Caspian Sea borders between Azerbaijan and Iran.
Atashgah Signed December 25, 1998; ratified June 1999	SOCAR (50%), JAOC consortium (50%). JAOC divided as Japex (22.5%, operator), Inpex (12.5%), Teikoku (7.5%), and Itochu (7.5%)	600 million barrels of oil in Atashgah, Mugandeniz, and Yanan Tava fields	$2.3 billion; $35 million invested in 1999.	Seismic work being undertaken. Second well at the Yanan-Tava field, part of a concession that also includes Ateshgah and Mugan-Deniz, struck gas, but not enough to be commercial. In June 2003, JAOC announced it would leave Azerbaijan.
Lerik, Jenab, Savalan, Dalga Signed April 27, 1999	SOCAR (50%), ExxonMobil (30%, operator), unassigned (20%)	1 billion barrels of oil	$3 billion	Exploration D-43, D-44, and D-73 blocks
Zafar-Mashal Signed April 27, 1999; ratified April 2000	SOCAR (50%), ExxonMobil (30%, operator), Conoco (20%)	1-2 billion barrels of oil, 1.8 tcf gas	$3 billion	Exploration D-9 and D-38 blocks. Reached final drilling point in September 2004, well likely to be shut down due to abnormally high pressure, and Exxon-Mobil failed to reveal commercial hydrocarbon reserves. Exxon-Mobil paid $32 million to relinquish its license in 2006.
Surakhani Signed August 16, 2005; ratified September 27, 2005	Rafi Oil (75%), SOCAR (25%)	50 million barrels of oil	$400 million	Contract states that oil production at the field should rise 50 % in two years. Rafi Oil will finance SOCAR’s stake in the project until it doubles the current rate of extraction.SOCAR will have the right to sever the contract if Rafi Oil does not start exploration within two years. This is initially a 25-year PSA with the possibility of a five-year extension.

Name of PSA

Project Partners

Estimated
Reserves

Projected Investment

Project
Status

Azeri, Chirag, and
Deepwater Gunashli
(Azerbaijan International Operating Company, AIOC)

Signed Sept. 20, 1994; ratified December 1994

BP (34.1%, operator), Chevron-Texaco (10.2%), Lukoil (10%), SOCAR (10%), Statoil (8.6%), ExxonMobil (8%), TPAO (6.8%), Devon Energy (5.6%), Itochu (3.9%), Amerada Hess (2.7%)

6.5 billion barrels of oil and 140 Bcf of has

$20 billion

Exports began late 1997. AIOC expects 674,000 barrels per day (33 million tonnes pa) from the four platforms in total for the full year. Of this, 131,000 barrels per day is expected from Chirag, 239,500 barrels per day from Central Azeri, 177,500 barrels per day from West Azeri and 126,000 barrels per day from East Azeri.

Shah Deniz
Signed June 4, 1996; ratified October 17, 1996

BP (25.5%, operator), Statoil (25.5%), SOCAR (10%), LukAgip (10%), TotalFinaElf (10%), OIEC of Iran (10.0%) TPAO (9.0%)

2.5 billion barrels of condensate; 22 Tcf (630 Bcm) of natural gas

Over $3 billion

Consortium plans to produce an average of around 63,000 barrels of oil equivalent per day (or 2.8 bn cubic metres of gas and 0.8 million tonnes of condensate for the entire year) during 2007. Plateau production from Stage 1 will be 8.6 billion cubic meters of gas per annum and approximately 45,000 barrels of condensate per day.

Lankaran-Talysh
Signed Jan. 13, 1997; effective June 1997

TotalFinaElf (35%, operator), Wintershall (30%), SOCAR (25%), OIEC of Iran (10%)

700 million barrels of oil

$2 billion; $36.6 million invested by 2000

First test well (2001) came up dry.

Yalama/D-222
Signed July 4, 1997; ratified November 1997

Lukoil (80%), SOCAR (20%)

750 million barrels at Yalama field

$2.5-5.5 billion

Drilling to 4,400 meters failed to find commercial reserves. Lukoil does not plan to return to exploration drilling until 2008. Lukoil has a commitment with SOCAR to drill the second well.

Absheron
Signed Aug. 1, 1997; ratified November 1997

SOCAR (50%); Chevron (30%, operator), TotalFinaElf (20%)

858 million barrels of oil; up to 100 Tcf of natural gas

$3.5 billion; $10.6 million invested by 2000.

Project closed. Chevron abandoned first exploratory well in 2001. In November 2003, Chevron and Total paid $40 million in compensation rather than drill a second well as required under contract.

Oguz
Signed Aug. 1, 1997; ratified November 1997

ExxonMobil (50%, operator), SOCAR (50%)

290 million barrels of oil and 685 bcf of gas

$2 billion; $5.5 million invested by 2000.

Dry well drilled in April 2001. ExxonMobil announced plans to quit the project in April 2002.

Nakhchivan
Signed Aug. 1, 1997; ratified November 1997

ExxonMobil (50%, operator), SOCAR (50%)

750 million barrels of oil

$2 billion; $22.5 million invested by 2000

ExxonMobil drilled onel well but decided not to take the risk of drilling the second exploration and will pay $18 million in compensation to Azerbaijan since no commercial hydrocarbons were found

Kurdashi-Araz-
Kirgan Daniz

Signed July 7, 1998; ratified July 1998

SOCAR (50%), Agip (25%, operator), Mitsui (15%), TPAO (5%), Repsol (5%)

730 million barrels of oil

$2.5 billion

First test wells drilled, with poor results. Italy's Agip paid compensation to Azerbaijan to be released from the PSA.

Inam

Signed July 21, 1998; ratified December 1998

SOCAR (50%), BP (25%, operator), Royal Dutch/Shell (25%)

2.2 billion barrels of oil

$2 billion; $7.5 million invested by 2000

BP suspended drilling of its first appraisal well in Aug. 2001 due to high pressure. New well is planned to begin drilling when a rig currently digging the Shah Deniz field becomes available

Araz, Alov, and Sharg

Signed July 21, 1998; ratified December 1998

SOCAR (40%), BP (15%, operator), Statoil (15%), ExxonMobil (15%), TPAO (10%), Alberta Energy (5%)

6.6 billion barrels of oil

$10 billion

In exploring phase in 2004. Confrontation with Iranian gunboat in July 2001; exploration suspended, pending resolution of Caspian Sea borders between Azerbaijan and Iran.

Atashgah

Signed December 25, 1998; ratified June 1999

SOCAR (50%), JAOC consortium (50%). JAOC divided as Japex (22.5%, operator), Inpex (12.5%), Teikoku (7.5%), and Itochu (7.5%)

600 million barrels of oil in Atashgah,
Mugandeniz, and Yanan Tava fields

$2.3 billion; $35 million invested in 1999.

Seismic work being undertaken. Second well at the Yanan-Tava field, part of a concession that also includes Ateshgah and Mugan-Deniz, struck gas, but not enough to be commercial. In June 2003, JAOC announced it would leave Azerbaijan.

Lerik, Jenab,
Savalan, Dalga

Signed April 27, 1999

SOCAR (50%), ExxonMobil (30%, operator), unassigned (20%)

1 billion barrels of oil

$3 billion

Exploration D-43, D-44, and D-73 blocks

Zafar-Mashal

Signed April 27, 1999; ratified April 2000

SOCAR (50%), ExxonMobil (30%, operator), Conoco (20%)

1-2 billion barrels of oil, 1.8 tcf gas

$3 billion

Exploration D-9 and D-38 blocks. Reached final drilling point in September 2004, well likely to be shut down due to abnormally high pressure, and Exxon-Mobil failed to reveal commercial hydrocarbon reserves. Exxon-Mobil paid $32 million to relinquish its license in 2006.

Surakhani

Signed August 16, 2005; ratified September 27, 2005

Rafi Oil (75%), SOCAR (25%)

50 million barrels of oil

$400 million

Contract states that oil production at the field should rise 50 % in two years. Rafi Oil will finance SOCAR’s stake in the project until it doubles the current rate of extraction.SOCAR will have the right to sever the contract if Rafi Oil does not start exploration within two years. This is initially a 25-year PSA with the possibility of a five-year extension.

Name of PSA	Project Partners	Estimated Reserves	Projected Investment	Project Status
Kalamaddin-Mishovdagh (formerly AzPetoil JV) Signed as JV in 1992; converted into PSA in 2000	Nations Petroleum (85%); SOCAR (15%)	200 million barrels of oil	$178 Million	Production averaged 5,000-7,000 bbl/d during 2007, but Nations Petroleum was reportedly looking to sell its majority stake during 2007. EBRD also a partner.
Anshad Petrol Signed as JV in 1993; converted into a PSA in 2000	SOCAR (51%), Attila Dogan (31.5%), Land and General Berhard (17.5%)	219 million barrels at Neftchala, Khilly, Babazanan	--	Drilled 4 wells 1998-1999. Oil Production averaged 77,000 bpd in 2004. Gas production averaged 1.1 mcf/day for 2004.
AzGeroil Signed as JV in 1995; converted into a PSA in 2000	SOCAR (51%), Grunewald (49%)	140 million barrels at Ramany, Balkhany, and Sabunchi fields	--	Production averaged 1,000 bbl/d in 1999.
Southwest Gobustan Signed June 2, 1998; ratified November 1998	SOCAR (20%), CNPС of China (62.83%) and Arawak Energy of Canada (37.17%)	147 million barrels of oil; up to 7 trillion cf of natural gas	$700 million	In Feb. 2006 2 wells are producing total of 1 mill. cubic feet/day, expecting to produce 10 mill. cubic feet/day.
Zykh-Govsany Signed June 5, 2000, ratified June 2001, Annulled 2005; Resigned (w/Russneft) November 2006	SOCAR (25%); Russneft(75%),	66-140 million barrels of oil	$150 million (new investment by Russneft)	Lukoil pulled out of investment due to high environmental costs, but Russneft plans to apply new technology to enhance oil recovery.
Kursangi-Garabagli Signed December 15, 1998; ratified April 1999	SOCAR (50%), CNPC (30%), Amerada Delta-Hess JV (20%)	182.5 million barrels of oil	$1 billion; proposed $50 million in 2006	10 additional wells drilled in 2003 to increase production; fields producing 6,600 bbl/d in June 2004. 8 additional wells planned for 2006. Operators reportedly looking to send oil through BTC.
Muradkhanli-Jafarli-Zardab Signed July 21, 1998; ratified November 1998	Ramco (50%, operator), SOCAR (50%)	730 million barrels of oil	$1 billion	1st test well at Muradkhanli shut down in April 2001. CNPC won a tender to develop the block, although no new PSA has been signed yet.
Padar-Kharami Signed April 27, 1999	Nations Petroelum (85%, operator), SOCAR (15%)	580-750 million barrels of oil	$140 million	3-4 exploration wells planned for 2006. EBRD also a partner.
Shirvanoil Signed as JV in 1997; converted into a PSA in 2000	SOCAR (49%), Caspian Energy Group (UK) (51%)	650 million barrels of oil at Kyurovdag field	$36 million	Rehabilitating existing wells since 1997. Has produced 11.6 million barrels of oil since 1997.
West Absheron (Karadag-Kergez- Umbaki fields) Signed August 10, 1994	BMB (100%)	200 million barrels of oil	$700 million	Project area including the fields Garadag, Kyorghex and Umbaki sold in a contract block to SOCAR in 1999. SOCAR subsidiary Azneft started pre-drilling programme at field in 2005

Name of PSA

Project Partners

Estimated
Reserves

Projected Investment

Project
Status

Kalamaddin-Mishovdagh
(formerly AzPetoil JV)

Signed as JV in 1992; converted into PSA in 2000

Nations Petroleum (85%); SOCAR (15%)

200 million barrels of oil

$178 Million

Production averaged 5,000-7,000 bbl/d during 2007, but Nations Petroleum was reportedly looking to sell its majority stake during 2007. EBRD also a partner.

Anshad Petrol

Signed as JV in 1993; converted into a PSA in 2000

SOCAR (51%), Attila Dogan (31.5%), Land and General Berhard (17.5%)

219 million barrels at Neftchala, Khilly, Babazanan

Drilled 4 wells 1998-1999. Oil Production averaged 77,000 bpd in 2004. Gas production averaged 1.1 mcf/day for 2004.

AzGeroil

Signed as JV in 1995; converted into a PSA in 2000

SOCAR (51%), Grunewald (49%)

140 million barrels at Ramany, Balkhany, and Sabunchi fields

Production averaged 1,000 bbl/d in 1999.

Southwest Gobustan

Signed June 2, 1998; ratified November 1998

SOCAR (20%), CNPС of China (62.83%) and Arawak Energy of Canada (37.17%)

147 million barrels of oil; up to 7 trillion cf of natural gas

$700 million

In Feb. 2006 2 wells are producing total of 1 mill. cubic feet/day, expecting to produce 10 mill. cubic feet/day.

Zykh-Govsany

Signed June 5, 2000, ratified June 2001, Annulled 2005; Resigned (w/Russneft) November 2006

SOCAR (25%); Russneft(75%),

66-140 million barrels of oil

$150 million (new investment by Russneft)

Lukoil pulled out of investment due to high environmental costs, but Russneft plans to apply new technology to enhance oil recovery.

Kursangi-Garabagli

Signed December 15, 1998; ratified April 1999

SOCAR (50%), CNPC (30%), Amerada Delta-Hess JV (20%)

182.5 million barrels of oil

$1 billion; proposed $50 million in 2006

10 additional wells drilled in 2003 to increase production; fields producing 6,600 bbl/d in June 2004. 8 additional wells planned for 2006. Operators reportedly looking to send oil through BTC.

Muradkhanli-Jafarli-Zardab

Signed July 21, 1998; ratified November 1998

Ramco (50%, operator), SOCAR (50%)

730 million barrels of oil

$1 billion

1st test well at Muradkhanli shut down in April 2001. CNPC won a tender to develop the block, although no new PSA has been signed yet.

Padar-Kharami

Signed April 27, 1999

Nations Petroelum (85%, operator), SOCAR (15%)

580-750 million barrels of oil

$140 million

3-4 exploration wells planned for 2006. EBRD also a partner.

Shirvanoil

Signed as JV in 1997; converted into a PSA in 2000

SOCAR (49%), Caspian Energy Group (UK) (51%)

650 million barrels of oil at Kyurovdag field

$36 million

Rehabilitating existing wells since 1997. Has produced 11.6 million barrels of oil since 1997.

West Absheron (Karadag-Kergez-
Umbaki fields)

Signed August 10, 1994

BMB (100%)

200 million barrels of oil

$700 million

Project area including the fields Garadag, Kyorghex and Umbaki sold in a contract block to SOCAR in 1999. SOCAR subsidiary Azneft started pre-drilling programme at field in 2005