Russian oil major LUKoil and Azeri state oil company SOCAR on January 9th signed an oil exploration deal worth $250 million during an official two-day visit by Russian President Vladimir Putin to Azerbaijan on January 9th-10th.
The exploration deal covers an onshore Caspian block, which includes the Govsany and Zikh oil fields in the southern portion of the Apsheron peninsula. The block has been producing for more than 30 years and has estimated residual reserves of 20 million metric tonnes.
Under the agreement signed by the presidents of LUKoil and SOCAR, the two companies will rehabilitate and explore the block on a parity basis for 25 years. LUKoil will process extracted crude at local refineries and then market the products at its gasoline stations in Azerbaijan.
The two countries agreed to decide within two months what volumes of Caspian crude would be transported from Baku to the Russian port of Novorossisk over the next two years.
In addition, Putin indicated that the prospect of exporting Russian natural gas to Azerbaijan was “extremely promising.”
Russian and Azeri officials also discussed the delineation of borders in the region, which have yet to be defined a decade after the collapse of the Soviet Union.
Putin and Azeri President Haydar Aliyev signed a document establishing guidelines for demarcating economic borders in the Caspian Sea and agreed that the issue must be resolved in conjunction with all five bordering states, including Kazakstan, Turkmenistan and Iran.
© 2001 Mena Report (www.menareport.com)
