Ilham Aliyev, vice-president of Azerbaijan's state oil company SOCAR, said on Wednesday, August 1, that the oil company BP will not be let out of its obligation to search for oil in a disputed sector of the Caspian Sea.
"SOCAR will insist that work continues on the Alov-Sharg-Araz structure and that the contract is honoured," said Aliyev, who is also the son of Azeri President Heydar Aliyev.
After a BP survey vessel was threatened by an Iranian warship in the Alov-Sharg-Araz block last week, BP said it was suspending operations there until the border dispute with Iran had been settled.
"The contract can be used to bring pressure on the company," said Aliyev. "The contract specifies the research period and the company's obligations in terms of seismic testing and drilling."
He said that SOCAR would hold a meeting with BP executives in the next few days to discuss the situation. BP was a major investor in the Azeri sector of the Caspian and was tied into a number of important contracts, said Aliyev. "Therefore we have to have talks with them."
Asked to respond to Aliyev's comments, a spokeswoman for BP in Azerbaijan said that the company was "in constant consultations with SOCAR and the other partners in the consortium."
"We are currently evaluating our options about how to move forward," the spokeswoman added.
BP leads the consortium signed up to develop the Alov-Sharg-Araz block and also has a 15-percent stake.
Other members are SOCAR with 40 percent, ExxonMobil and Statoil each with 15 percent, Turkey's TPAO with ten percent and Alberta Energy, which has a five percent holding.
Under the terms of the deal with the Azeri government, investment worth nine billion dollars over the next twenty years has been earmarked for the block, in the southeast of the Caspian.
Also on Wednesday, the SOCAR vice-president dismissed a string of drilling disappointments in the Azeri sector of the Caspian which have shaken confidence that there are still substantial hydrocarbon reserves there.
Aliyev said it was not the first time people had said Azerbaijan had no more oil and claimed the talk was driven by "political motives."
He said: "No-one can give guarantees about which block you'll find oil in and in which you'll find gas. International practice shows that only 30 percent of exploratory drilling is successful. "If you take that into account then you can see that Azerbaijan's record is much better. It stands at about 50 percent." — (AFP)
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