Oil & gas news

SOCAR STARTS REHAB OF MURADKHANLI

The SOCAR-owned onshore oil and gas production unit has started rehabilitation of the oil storage and transportation infrastructure on "Muradkhanli" field. After the reconstruction of the storage tanks and oil and gas pipelines before the end of August, the unit will be able to embark on production of hydrocarbons, SOCAR said Tuesday.

Around 20 production wells have been prepared already.

Around $1.5 million will be spent on rehabilitation operations. British Ramco has reportedly paid a compensation of $250,000 when returning the field to SOCAR. The funds will also be spent on restoration of Muradkhanli.

There are 56 oil-wells on the field, capable of giving 50,000 tons of crude a year.

SOCAR RECOVERS PROPERTY FROM RUSSIA

Upper modules ## 11, 12, 13, 15 and 53 of the "Gunashli-13" stationary platform have been returned to Baku on board a transport barge, while another barge has prepared in Astrakhan to take the largest module, # 1, to Azerbaijan. Also to be recovered from Russia are block-modules ## 9 and 21, currently stored at the Karl Marx plant. All the expenses related to the loading and transportation have been assumed by the Azerbaijan party, according to a source from the Caspian Shipping Company.

The modules are earmarked for the "Bayil Limani" offshore exploration drilling unit, which says the lower part of the platform has been at sea awaiting the upper modules since 1990.

Back in 1984 Azerbaijan placed an order with the Astrakhan shipyard for construction of 31 modules for "Gunashli-13" platform. Initially the order amounted to 39.1 million Rubles, but following a new protocol the value of the contract rose to 47.5 million, the amount Azerbaijan managed to fully clear. 18 modules were produced and delivered to Azerbaijan before the break-up of the USSR.

Afterwards, Russian Ministry for State Property announced that in accordance with the Bishkek Protocol Russia would consider the whole property left in its soil to be its own. Consequently, a prohibition was imposed on the other 13 modules.

Later on, SOCAR managed to deliver 5 more modules to Azerbaijan.

Only after President Aliyev's visit to Russia in February 2001 and his personal request of Russian counterpart Vladimir Putin were the rest of the modules released.

The deal promises to turn "Gunashli-13" into one of the most powerful stationary drilling platforms in the Caspian. It will drill 20 oil and gas wells. According to the Gunashli development program, production from the field is expected to double by 2007.

CASPIAN TRANSCO CLOSES TERMINAL IN ALI-BAYRAMLI

Caspian TransCo has closed its Ali-Bayramli terminal. According to a competent source, 50 personnel have been reduced, with more cuts expected in the company's Baku representative office.

The closure comes after AzPetrol opened its own terminal, while Salyan Oil started selling its oil to SOCAR (earlier the oil was transported by Caspian TransCo).

The company currently operates a terminal in Dubandi, transporting Kazakh oil to western markets.

NEW GAS WELL COMMISSIONED ON GUNASHLI

The offshore exploration drilling unit "Bayil Limani" has commissioned a high flow-rate gas well a month ahead of schedule. The well flows at 300,000 cubic meters of gas a day and is 3,550-meter deep. This is the second gas well of this depth on Gunashli, as the first was commissioned in the early 1990s and is still in operation.

A source from SOCAR said the company intends to double gas production from Gunashli before 2007, bringing it to 4,253,000,000 cubic meters a year. New gas wells will be drilled using a number of new platforms.

TOTALFINAELF DELEGATION DUE IN LATE AUGUST

The visit to Baku by a delegation of TotalFinaElf, earlier scheduled for late July, has not taken place because of what the company describes as worsened Azeri-Iranian relations in the wake of the recent Caspian incident.

The delegation was expected to hold talks over the shallow portion of Gunashli field. TotalFinaElf stated back in May its readiness to start the negotiations. At the present time, this portion of Gunashli gives two thirds of all SOCAR oil, while its total reserves are estimated at 100 million tons.

The parties were also going to speak about further appraisal drilling operations on Lankaran-Daniz / Talysh-Danish, where both exploratory wells came out dry. TotalFinaElf wants SOCAR to guarantee a compensation of $12 million in case a third well is not successful.

SIDETRACKED DRILLING ON SECOND GARABAGHLI WELL GETS UNDERWAY

Sidetracked drilling has started on the second well of the offshore Garabaghli field, a source from Salyan Oil, operator of the Kursangi-Garabagli contract, said Monday. The well has been drilled to the depth of 3,300 meters vertically and from now onwards the drilling will be sidetracked. The well is to reach the depth of 5,200 meters in late September and early October. The work is carried out by Croatian CrosCo.

The first exploratory well yielded positive results.

SOCAR holds a 50% stake in the Kursangi-Garabagli PSA, Frontera Resources and Delta Hess hold 30% and 20% respectively.

DEVON ENERGY NOT TO JOIN BTC PROJECT

When members of the BTC group of sponsors received a document on the commencement of the detailed engineering operations in June, Devon Energy did not endorse it and refused to participate in the operations.

Afterwards, it dropped out of the group and its equity was distributed among other partners, BP said Thursday.

The Baku office of Devon Energy has confirmed the report, declining to elaborate a reason. This has brought the composition of the group of BTC sponsors down to SOCAR, BP, Unocal, Statoil, TPAO, Itochu, and Delta Hess.

It is indicative that Devon Energy did not join the BTC project on its own, but took over a portion of Ramco's interest in the ACG contract and a 0.6% stake in the group of sponsors.

"KVAERNER HYDROCARBON" TO TAKE PART IN SHAH-DANIZ PROJECT

"Kvaerner Hydrocarbon" is going to take part in the Shah-Daniz natural gas transportation project. The decision follows a meting of Georgian President Eduard Shevardnadze with the president of "Kvaerner Hydrocarbon" Ian Corbidge, according to Black Sea Press agency.

At present, the company plans on engineering operations and intends to transport pipes to Turkey via Georgia.

The parties also spoke of expanding the capacity of the Baku-Supsa terminal, attracting "Kvaerner" to the Baku-Tbilisi-Ceyhan project, etc.

"Kvaerner Hydrocarbon" has been cooperating with the Georgian International Oil Corporation for several years and was involved in the Baku-Supsa export pipeline project.

SOCAR IMPROVES PERFORMANCE

In January-July 2001, SOCAR exported 1,255,000 tons of crude oil and 1,176,774 tons of oil products totaling $431,614,471, a source from the company told Azernews Monday.

The SOCAR foreign relations department exported 554,257 tons of oil products, including diesel fuel (319,763 tons), aviation kerosene (130,904), automobile gasoline (102,293), and technical butane (336). $322,614,471 worth of 1,230,000 tons of oil was dispatched to Novorossiysk, Russia, during this period.

The SOCAR-owned "AzNeftYag" refinery exported 622,517,800 tons of oil products totaling $109 million in seven months of 2001, including $21.5 million worth of 149,375,300 tons in July. 63,447,800 tons of heating fuel was marketed in Turkey for the first time. The deal has proved to be profitable, as marketing price has exceeded the cost three times.

World crude prices play into the hands of SOCAR, as a ton of automobile kerosene costs $233,980, of aviation kerosene - $255,770, of diesel fuel - $210,130, and of butane - $155, while crude is traded at $168,770 per ton, or $23,090 per barrel. The state budget envisions $22 per barrel. So, any rises in crude prices would mean extra incomes, according to the source.

JULY OIL OUTPUT PLAN OVER-FULFILLED, UNLIKE GAS

In July 2001, SOCAR produced 769,600 tons of oil with the plan of 756,200 tons, or 101.8% of the plan, according to a SOCAR source. Both off- and on-shore plans have been fulfilled, with 633,200 tons produced off-shore (100.6%) and 136,400 tons on-shore (107.6%).

The June gas production plan has not been fulfilled, as 375,800,000 cubic meters were produced offshore (96%) and 15,500,000 (98.9%) onshore. Gas production in July constituted 393,300,000 cubic meters (96.1%). Considering the gas produced by the AIOC, 82,400,000 cubic meters (98.2%), total gas production in July made up 96.5%.

7-MONTH OIL OUTPUT ABOVE PROJECTIONS AND LAST YEAR's

5,242,300 tons of oil were produced in January-July of this year, or 101.4% of the plan, according to a SOCAR source. 4,324,000 tons were produced offshore (100.5%) and 918,300 tons onshore (106.2%).

2,751,900,000 cubic meters of gas were produced in January-July (98.8%), including 2,614,400,000 cubic meters offshore (97.6%) and 137,500,000 onshore (104.7%).

The AIOC produced 490,300,000 cubic meters of gas (85.6%).

Total gas production in 7 months of 2001 constituted 3,242,200,000 cubic meters, or 95.9% of the plan and 96.2% of last year's 7-month production.

SOCAR-OWNED WELLS GROWING

As of August 1, the number of SOCAR-owned wells reached 6,989 (1,372 offshore and 5,617 onshore), or 99 more than earlier this year.

In January-July of 2001, 334 wells were put into service (78 offshore and 256 onshore) and 235 shut down (77 offshore and 158 onshore).

DRILLING SLOWING DOWN

In January-July 2001, the drilling plan was under-fulfilled by 19.8%, while in January-June the lagging behind constituted 13%. Instead of the planned 88,297 meters, the footage of only 70,851 meters was achieved. The backwardness was solely due to onshore drilling, while 55.4% of the plan has been carried out. Although offshore drilling constituted 104.6% of the plan, this could not rectify the overall drilling performance.

The exploration drilling projections have been considerably over-fulfilled, with drilling depth of 7,960 meters achieved and 6,295 meters planned, or 126.4% of the plan and 588.3% of last year's. Offshore, the plan has been over-fulfilled by 34.1% and onshore by 6.5%.

As far as production drilling is concerned, which has largely preconditioned the backwardness in overall drilling indicators, drilling depth of 62,891 meters has been achieved instead of the planned 82,002 (76.7%). As where offshore drilling workers have coped with the plan (101.3%), only 53.3% of the plan has been met onshore.