BAKU (Reuter)–Azerbaijan’s parliament ratified a $2 billion deal on Tuesday with a group of foreign oil companies–led by the Amoco Corporation of the United States.
The deal–which involves tapping the Dan Ulduzu and Ashrafi oil fields in the Caspian Sea–was passed by a vote of 87 to 4–becoming Azerbaijan’s fourth major multi-billion dollar contract with foreign oil companies.
The production-sharing agreement will last 25 years–the first three years of which would involve the exploration of an area covering 453 sq. km.
Azerbaijan is to receive a signing bonus of $75 million under the agreement–which was first initialed in December 1996.
The foreign partners in the deal–in addition to Amoco–are Unocal International Exploration–Itochu Oil Exploration of Japan and Delta Nimir of Saudi Arabia.
Azerbaijan’s state oil company SOCAR holds a 20 percent stake in the deal.
SOCAR officials claim that the three fields are each estimated to contain reserves of 150 million tons of oil and 30 billion cubic meters of gas.
SOCAR said it had the right to include the Karabakh field if it was deemed commercially viable.
This is the first time oil fields will be developed in a section of the Caspian Sea which has not been explored to a great extent–Azeri parliamentarians said. If the estimates of a large oil supply prove to be true–the republic will increase oil extraction from the Caspian Sea bed and boost development of adjoining areas–they added.
Azerbaijan expects to receive $18 billion from foreign investmen’s.