Parliament of Azerbaijan Ratified the Rehabilitation, Development and Production Sharing Agreement jn Zykh-Govsany block between SOCAR and “RussNeft”
Milli Majlis (Parliament) of Azerbaijan ratified Tuesday the agreement between State Oil Company of Azerbaijan Republic (SOCAR) and OAO Oil & Gas Company “RussNeft” щт rehabilitation, development and production sharing on Zych-Govsany block of oilfields, says the correspondent of “Interfax-Azerbaijan” agency who attended the meeting.
“Under the agreement SOCAR owns 25% and RussNeft Absheron Investment Limited – 75%”, the vice-speaker of the Parliament Valekh Aleskerov pointed out.
According to V.Aleskerov, the contractors shall submit to SOCAR the program of production rehabilitation at these fields. SOCAR, in its turn, shall approve the program within 60 days.
After the agreement comes into force “RussNeft” shall pay Azerbaijan a bonus in amount of $2 mln. Besides, after increase of production amounts 1,5 times as compared with 2005, the Russian company shall pay another $2 mln. bonus”, the vice-speaker added.
V.Aleskerov stressed that “RussNeft” have all the necessary financial and technical capabilities to increase oil production at Govsany-Zykh block.
As it was reported earlier, SOCAR and “RussNeft” signed the agreement for development of the block Zykh-Govsany November 6, 2006. The contract was signed for 25 years with the option of extension for another 5 years. The volume of investments in development of the fields is estimated as $ 100-150 mln.
The fields are situated in the Sothern part of Absheron Peninsula. The total contract area is 65 square kilometers, preliminary results show the volume of net effective pay of the fields as 12 mln tons of oil.
Some years before LUKOIL had signed the contract for development of Zykh-Govsany block, but it was terminated December 2004 by the reason of unresolved environmental problems.