U.S. OIL COMPANIES SIGN MULTIBILLION CONTRACTS WITH AZERBAIJAN.

Two leading oil companies of the United States have signed oil contracts of multibillion-dollar value with Azerbaijan’s State Oil Company (SOCAR). Azerbaijani President Haidar Aliev and senior U.S. government officials witnessed the signing on April 27 in Washington.

Exxon signed an agreement which defines the exploration, development and production-sharing terms for the Zafar and Mashal offshore oilfields, which lie approximately 110 kilometers southeast of Baku, covering an area of 640 square kilometers, at water depths ranging from 550 to 900 meters. Azerbaijan estimates the recoverable reserves at 140 million tons of oil. Exxon is the project operator and holds a 30 percent interest, SOCAR holds 50 percent, and the remaining 20 percent is being sought by the Total company of France. Estimates of the investment value range from US$2 billion to US$5 billion during a thirty-year period.

Mobil signed a production-sharing contract for the Savalan, Dalga, Lerik-Deniz and Janub offshore oilfields–all of which lie approximately 200 kilometers south of Baku, covering an area of 850 square kilometers, at water depths ranging from 350 to 750 meters. Azerbaijan estimates the recoverable reserves at 120 million tons of oil. Mobil is the project operator and holds a 30 percent interest, SOCAR holds 50 percent, and the remaining 20 percent is open to bidders. Estimates of the investment value range from US$2 billion to US$4.5 billion during a similar thirty-year period.

Exxon and Mobil management regard these fields as very promising, but underscore the need to await exploratory drilling results for confirmation of the actual reserves, of the investment requirements and of the commercial profitability of these projects.

Also on April 27, SOCAR signed an exploration and production-sharing contract with the Texas-based company Moncrief Oil for the onshore Padar and Harami fields. These cover an area of 1,050 square kilometers, approximately 100 kilometers southwest of Baku in the lower Kura River valley, adjacent to the Kursangi-Karabagly fields which are being developed by another Texas company, Frontera Resources. The recoverable reserves of Padar and Harami have yet to be reliably estimated. The exploration-phase investment is projected at US$500 million. Moncrief has acquired a 64 percent interest in this project, with 16 percent to be awarded to another U.S. company and 20 percent retained by SOCAR (Business Wires, Dow Jones, Financial Times, Houston Chronicle, Azer-Press, April 27-28).

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