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RAMCO: OIL OR BROKERING COMPANY? By Anar Jabrayilli Azernews Staff Writer
Ramco is one of the most popular oil companies in Azerbaijan, not because the company was among those who paved the way to the republic or has applied latest onshore oil production technologies. Neither has Ramco helped Azeri men of culture, literature and arts, or refugees. An Azeri saying goes that everything is tried in time. The road Ramo has covered over these years has shown that the company has mainly been earning from brokering activities rather than oil production. Let's take a look at Ramco's record in Azerbaijan.
The talk about billions of tons of oil and trillions of cubic meters of natural gas in the Azeri sector of Caspian emerged shortly after the break-up of the Soviet Union. A newly-born independent state with countless woes, Azerbaijan opened its doors wide to foreign businessmen.
Soon afterwards, Scottish Ramco started taking interest in the partially developed Gunashli field. In those days, many believed that Dutch Shell, which worked in Azerbaijan back in the 19th century, would be the first to set foot on Azeri oil. But Ramco beat other oil giants to the punch-line in 1994, winning a 2.0825% interest stake in the Contract of the Century, Azerbaijan's biggest oil deal yet.
Ramco's second and so far the last project in Azerbaijan has been the involvement in the offshore field of "Muradkhanli". Under the contract signed in July 1998, Ramco was to invest $1-1.2 billion in the full-field development program. Having obtained operatorship rights in the project, Ramco embarked on exploratory drilling in April 2000. Later on, in December, the company said in a statement that drilling had discovered over 100 million tons of oil. The information was spread in no time leading to a surge in Ramco shares in international exchanges.
In an effort to further raise profits, Ramco sealed off SOCAR-owned oil wells in "Muradkhanli", thus laying off hundreds of national employees. The move was taken even though the wells were yielding 35,000-40,000 tons of crude per year.
In 2001, Ramco reported of reservoir leaks detected by a "Muradkhanli" well and announced a tender to repair the malfunction. The tender was a carefully planned step. By then, Ramco had put its interest stake in the Contract of the Century on sale at $150 million. In December 2000, Amerada Hess ($75,004,000), Devon Energy ($58,250,000) and Unocal ($16,746,000) took over Ramco's interest in the deal, while three months afterwards Ramco announced closing the "Muradkhanli" well and abandoning the project. Subsequently, the company shut down the well without the announced tender held.
Taking the developments in a rather quiet manner, Ramco has stated that it has spent $25 million on exploration and drilling, while specialists and experienced oil-workers say the figure has been seriously embellished.
So, what is this all about?
According to "Yeni Musavat" newspaper, Ramco has succeeded in obtaining long-term credits from international financial institutions and banks to be invested in Azeri oil sector. Besides, Ramco has earned some $200 million from profit oil and the sale of its 2.0825% stake in the Contract of the Century, whereby only $40 million was invested.
After abandoning "Muradkhanli" and selling its carried interest, many started thinking that Ramco intends to leave Azerbaijan. However, this has been denied by the company's Baku office. Immediately after the failure with "Muradkhanli", reports emerged that Ramco, together with "TotalFinaElf", is in talks with SOCAR over the shallow portion of "Gunashli" field with a final decision expected in May. In addition, Ramco holds a 1.55% interest stake in the Baku-Tbilisi-Ceyhan project.
The information on the talks is said to be nothing but another speculation attempt by Ramco, which is trying to preserve the sympathy of partners. This, in turn, is so important for further credits, exclusive rights and brokering activities.
We would not like this to be true. We want Ramco to continue being a company that will be remembered in Azerbaijan for years to come.
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© 1998-2003 Azernews. All Rights Reserved.
Issue No.15 (197), 2001
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