Business

SIEMENS-BAKU ELECTRIC GRID SAGA: NO END IN SIGHT

Signing of the agreement between the Azerbaijan Government and German Siemens, winner of the tender for a long-term concession of the "Baku Electric Grid" joint stock company, is still being delayed. The agreement was to be signed in June, while later the signing date was moved to August.

It was rumored that the negotiations between Siemens and the Ministry for Economic Development had yielded no fruit, but a source from the Ministry told Azernews Friday that the talks are still underway and it is premature to speak of their collapse.

If the agreement fails, new talks will be initiated with Turkish Barmerk Holding, second in the mentioned tender.

Under the tender, Siemens is to invest $770 million, including $139 in the first three years.

The bone of contention between the Azeri government and the German giant is electricity payments by the destitute categories of the population, as well as government guarantees of the investment.

EXXON AZERBAIJAN STARTS DRILLING ON NAKHCHIVAN

Exxon Azerbaijan Operating Company L.L.C. (Exxon Azerbaijan), an ExxonMobil subsidiary, announced Wednesday that it had begun drilling an exploration well in the Nakhchivan Prospective Structure, offshore Azerbaijan.

The well, known as Nakhchivan-1, is located about 100km south of Baku, 45km east of the Azerbaijan coastline, in 142m of water and is being drilled by the Istiglal semi-submersible drilling rig.

Exxon Azerbaijan's efforts to date in the Nakhchivan block have been aimed at analyzing the large offshore structure to determine whether it contains an accumulation of hydrocarbons that is sufficient for economic development. The Nakhchivan-1 well, the first of a two-well program, is strategically located on the northern structural flank to evaluate resource potential and to reduce drilling time.

A second Nakhchivan well is scheduled to be drilled with the DSS-20, a new semi-submersible drilling rig currently under construction in a Baku shipyard. The DSS-20 will also be used to drill the Exxon Azerbaijan operated Zafar Mashal block.

Exxon Azerbaijan is the operator of the Agreement on Exploration, Development and Production Sharing for the Nakhchivan Offshore Block in the Azerbaijan Sector of the Caspian Sea (The "Nakhchivan PSA"). The Company operates the Nakhchivan PSA on behalf of the contracting parties, Exxon Exploration and Production Azerbaijan Limited, and SOCAR Oil Affiliate.

Through its subsidiaries, Exxon Mobil holds interests in five ratified PSAs covering almost one million acres in Azerbaijan. The agreements cover the Azeri-Chirag-Guneshli, Araz-Alov-Sharg, Zafar-Mashal, Nakhchivan and Oguz blocks. The sixth PSA, on Lerik-Daniz, has not yet been ratified.

The Nakhchivan PSA is owned by SOCAR and ExxonMobil, each holding 50% stakes.

GAS NETWORKS TO BE PRIVATIZED NEXT YEAR

Gas distribution networks in Azerbaijan will be denationalized in 2002, the Ministry for Economic Development said in a statement Friday. 4 joint stock companies will be set up instead to be further privatized through international bidding.

Nowadays, the networks are run by "AzeriGas" joint stock company, which will only manage them after the denationalization.

Azerbaijan has two gas storage facilities, the largest ones in the region, capable of accommodating 700-800 million cubic meters of gas in fall and winter. SOCAR is has exclusive authority to engage in gas production and produces 5-6 billion cubic meters of natural gas a year. The figure is half the country needs.

KAMAZ TRUCKS TO BE MADE IN GANJA

The manufacturing of Russia’s famous «Kamaz» trucks in Ganja was high on agenda in a meeting of the delegation led by the «Kamaz» technical director Yevgeniy Pronin with the Azer government.

According to a government source, having toured the Ganja automobile plant, Kamaz executives discussed the delivery of equipment, restoration of the fuel and heating center and revival of the plant's production capacties.

Production is expected to start after the Azeri government approves the feasibility study prepared by Kamaz.