OREANDA-NEWS. May 06, 2011. Today the Parliament of Azerbaijan has ratified oil and gas production sharing agreements (PSA) signed on 7 October 2010 between SOCAR and BP Azerbaijan for exploration & development of structures Shafag and Asiman in the Azerbaijani sector of the Caspian Sea, which bore before notations D8 and D10.

Presenting the document Parliament vice speaker and Valeh Alasgarov said that within 30 days after the document comes into force BP Exploration is to pay a bonus for the sum of USD 20 million to Azerbaijan.

" If the exploration program proves oil reserves then the bonus will make USD 1 million for each 100 million barrels. After commercial development starts on the block the bonus for the sum of USD 50 million should be paid in 3 months. Besides BP Exploration should annually pay acre payments to Azerbaijan - USD 2.000 for each square km of contract area",- Alasgarov said.

The contract with BP offers equity stake parity (by 50%) to transform into joint operatorship by the period of development.

The PSA is designed for 30 years with a possibility of extension by another five years. Mandatory exploration period is 4 years, during which the contractor must drill at least 1 exploration well, and one well within the mandatory period may be drilled by mutual agreement of the parties. The exploration period can be extended for another 3 years to drill 2 more exploration wells. Minimal geological exploration was conducted on the structures, and their current reserves are estimated in 500 bn cu m of gas and 65 million tons of condensate.

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.

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.