BAKU (Reuters)–Azeri state oil firm SOCAR said on Thursday US oil giant Chevron Texaco planned to leave Absheron–an offshore project in Azerbaijan–because it failed to find enough oil or gas during the exploration period.
The move follows a number of recent failures by rivals such as Exxon Mobil–TotalFinaElf and Agip to find oil in the Azeri sector of the Caspian Sea–which some experts say contains less reserves than officially estimated.
"Chevron told us they are not going to drill more wells and that they are leaving the project. They are not happy with discovered reserves," SOCAR’s vice-president Khochbakht Yusufzade told reporters.
Chevron Communications manager in Azerbaijan Ismail Mamedov declined to comment
The landmark $3.0 billion deal–Chevron’s only exploration project in Azerbaijan–was signed in 1997 in Washington on the sidelines of an Azeri-US summit–but a first well drilled in 2001 failed to discover big volumes of oil or gas.
Yusufzade said SOCAR–still holding 50 percent in Absheron–planned to replace Chevron–the project’s leader–with another international firm.
Chevron held 30 percent in the project–which still involves French major TotalFinaElf owning 20 percent.
Azerbaijan has signed 21 production sharing agreemen’s worth $60 billion with international oil firms over the past decade. The failure of Absheron reduces the number of projects still in place to 14. They are worth some $45 billion.
The only offshore project in Azerbaijan currently producing oil is the Azeri-Chirag-Guneshli oil field–which is run by an international consortium led by BP.
Chevron is heavily involved in oil production in neighboring Kazakhstan–where it leads an international consortium producing 240,000 barrels per day–exported to international markets via Russia.
The decision to quit Absheron–which experts say contains mostly gas–coincided with a Statoil-led group giving a final go-ahead for a $3.2-billion project to develop a neighboring Azeri giant gas field–Shakh Deniz–and build a gas pipeline to Turkey.