BAKU - Norway’s Statoil and State Oil Company of Azerbaijan (SOCAR) signed an memorandum of understanding on the joint development of the Zafar-Mashal block in Azerbaijan’s section of the Caspian Sea on 8 April. Norway’s Statoil CEO Helge Lund and State Oil Company of Azerbaijan (SOCAR) President Rovnag Abdullayev signed the at SOCAR’s headquarters in Baku. A few blocks away, Statoil and SOCAR executives met in the context of the World Economic Forum at the JW Marriott Absheron in Baku.
According to the document, the talks will last for 12 months from the moment of memo effectiveness and the basic commercial principles and provisions of future agreement will be defined by their results. “SOCAR and Statoil have been co-operating for 20 years and this memo is a new stage in our interaction”, Abdullayev said.
“We are very pleased with co-operation with SOCAR, we are pleased with the investment climate created in Azerbaijan. We are happy with the signing of this memo, which has become the first stage in our future agreement”, Lund said, adding that there are good prospects for working in the Caspian Sea.
SOCAR estimates that Zafar-Mashal, a deepwater block located about 110 kilometres southeast of Baku in Azerbaijan's section of the Caspian Sea, contains 300 billion cubic metres of natural gas and 37 million metric tonnes of condensate.
The first contract for the development of the prospective Zafar-Mashal offshore structure was signed between SOCAR and US ExxonMobil in April 1999 but the contract was closed due to discovery of commercially unattractive volumes of hydrocarbons.
Azerbaijan is the second largest contributor to Statoil's international production - about 20% of international production comes from the former Soviet republic.
Statoil Azerbaijan started its work in 1992. The company is a partner on Azerbaijan’s Shah Deniz field in the Caspian Sea. The Shah Deniz consortium is expected to choose between the Nabucco West and the Trans Adriatic Pipeline (TAP) to transport Azerbaijani gas to Europe by the end of June. Statoil holds 42.5% of the shares in TAP.
