OREANDA-NEWS. March 12, 2010. The MOU was signed in London on 13 July 2009 by SOCAR president Rovnag Abdullayev and Andy Inglis, BP’s chief executive of exploration and production.

SOCAR Investment Department’s head Vagf Aliyev says that commercial negotiations with BP are still underway.

“But the future contractor is going to define itself with engineering works. For Shafag/Asiman block development it is needed to choose technology for production of more than 7,000 m from wells under abnormally high pressure. In factm such technologies are lacking. Technology of such kind should be developed and that can be done for the next 3-4 years,” he said.

Earlier SOCAR invited officially BP for negotiations on key principles of the future agreement. After coordination of the basic principles the sides will switch to coordination of the contract itself.

Meanwhile, SOCAR has not forecast on the occasion of terms of completion of negotiations and singing of the future production sharing agreement (PSA), although earlier it was expected that work over the agreement would begin already in 2010.

In accordance with existing procedure after signing of the MOU that gives exclusive right to BP to conduct negotiations about production sharing agreement on both structures’ exploration and development the sides should accord the PSA basic principles and a contract itself on this basis.
After the signing the MOU should pass the process of ratification in Milli Majlis (Azerbaijani parliament).

The two-structure block lies some 125 km (78 miles) to the south-east of Baku. Its covers an area of some 1 100 square kilometers and has never been explored before. It is located in a deepwater section of about 650-800 meters with reservoir depth of about 7 000 meters.

Earlier SOCAR first vice president Khoshbakht Yusifzadeh said that only 2D geophysical surveys had been conducted at the above-listed perspective structures.

“According to the theory of probability these deeply-laying structures (7-7,500 m) can be gas,” he said.