Second Azeri Oil Drilling Comes Up Empty

BAKU (Reuters)–One of Azerbaijan’s multinational oil consortia–the $1.5 billion North Absheron Operating Company failed to find commercially viable crude reserves in a second test drill–state oil company SOCAR said Monday.

SOCAR has a 20 percent share in North Absheron–Amoco 30 percent–Unocal 25.5 percent–Japan’s Itochu 20 percent and Delta Hess of Saudi Arabia 4.5 percent.

"The completion of the drilling of test wells on the Dan Ulduzu structure did not uncover commercially viable reserves of petroleum," Midkhat Rzayev–chief of SOCAR’s exploration department–told Reuters.

Dan Ulduzu is one of two prospective fields being explored under the NAOC contract.

An NAOC press release said the results of the second test drilling–together with a first test earlier this year which also did not find viable quantities of oil or gas–were being analysed.

It said the test drilling reached a depth of 3,105 metres over 42 days.

"Further evaluation of the (second) well–combined with the assessment of the first well will be required to determine future drilling plans and the commercial viability of the block. NAOC–along with its shareholders–are evaluating the exploration well results," it read.

SOCAR geologists had estimated the NAOC recoverable crude reserves at 100-150 million metric tons before the contract was signed.

Another Azeri international consortium–the Pennzoil-led CIPCO–has also failed in two test drillings to find commercially viable reserves of crude–although it did discover natural gas.

CIPCO on Monday began drilling a third and final test well to determine whether to continue or abandon the $2 billion project.

Meanwhile–Azeri officials and representatives of the country’s main international oil consortium claimed that there were no plans to delay a decision due next month on building a huge oil pipeline to pump Caspian crude to export markets.

There has been speculation among some industry officials and western diplomats in Azerbaijan that a decision on the line–likely to run from Baku through Georgia to Ceyhan on Turkey’s Mediterranean coast–might be delayed well into next year.

This has been attributed in part to depressed world crude prices and political instability in Russia–perceived as possibly affecting Azerbaijan–although Baku has said Moscow’s financial and political woes have very limited impact on it.

John Leggate–President of the $8 billion Azerbaijan International Operating Company–a British Petroleum-led 12-member consortium–said on Monday a joint working group between AIOC and Azerbaijan State oil company SOCAR was still eyeing the October deadline.

Last week–the Turkish Yeni Yuzel newspaper reported that the United States had proposed to delay a final deal on the construction of the Baku-Ceyhan pipeline from October to early 1999.

The US proposal angered Turkish officials who have been waiting anxiously for the culmination of the deal–the Turkish newspaper reported.

The newspaper said that the US has sent letters to Azerbaijan–Russia–Kazakhstan and other nations involved in the Caspian oil deal pointing out that the time frame for the construction of the pipeline was inappropriate–due to the volatile situation in the Caucasus.


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