RussNeft and SOCAR (State Oil Company of Azerbaijan Republic) have signed a contract on exploration and development of the Govsany-Zykh block
Baku. November, 3. INTERFAX – AZERBAIJAN – State oil company of Azerbaijan Republic (SOCAR) and OAO Oil and Gas Company RussNeft formed an agreement on exploration, development and production sharing for the Govsany-Zykh block of fields. The document has been signed by President of SOCAR Rovnag Abdullaev and Persident of RussNeft Mikhail Gutseriev, Interfax – Azerbaijan’s correspondent communicated from the ceremony of signing.
SOCAR’s share in the 25 year contract will be 25%, RussNeft’s share will be 75%.
According to Mr. M. Gutseriev, the investment into fields’ development is estimated $100-150 mln, 10-15% of which will be allocated to the environmental protection, professional safety etc.
Under the contract RussNeft should increase 1.5-fold oil production over two years at the fields as compared to 285 tons daily at the moment.
Mr. R. Abdullaev, in his turn, pointed it out that ecological issues solving is SOCAR’s central priority.
The fields are situated in the southern part of the Apsheron peninsula. The total contractual area is 65 square kilometers, according to preliminary data, the amount of industrial residual recoverable reserves at the field is 12 mln tons of oil.
Earlier Oil Company LUKOIL (PTC: LKOH) had formed a contract on the development of the Govsany-Zykh block but it was cancelled in December 2004 for unsolved ecological problems.
The Zykh field was discovered in 1935, production is 25 tons of oil and 20 thousand cubic meters of gas daily. The field Govsany was discovered in 1948, at the moment 260 tons of oil and 90 thousand cubic meters of gas are being produced at it.