A new drilling contract for development and exploration projects

4 August 2005

BP as operator of the Azeri-Chirag-Gunashli (ACG), Shah Deniz and Inam Production Sharing Agreements (PSAs) announced the signing of a new contract with Global Santa Fe (GSF), a partner in CDC (Caspian Drilling Company) – a joint venture with SOCAR, for the provision of the Istiglal and Dada Gorgud semi-submersible drilling rigs for exploration and development projects in the Azerbaijan sector of the Caspian Sea. 

Both rigs belong to SOCAR. The total rig and support workforce comprises some 300 people, who are mainly local Azerbaijan citizens. The contract underpins BP’s long-term commitment to develop the oil and gas reserves of Azerbaijan on behalf of SOCAR and partners. The expected contract value is worth approximately $250million and this is a substantial commitment to the continued drilling and employment of local expertise and equipment in the Azerbaijan sector of the Caspian Sea. 

The Dada Gorgud is currently engaged in ACG pre-drill activities over the East Azeri template. Later in the year the rig will commence work on Deep Water Gunashli (ACG Phase 3). 

The Istiglal is preparing to begin drilling another Shah Deniz development well, which will be followed by appraisal and exploration activity on Shah Deniz and probably Inam. 

Natig Aliyev, President of SOCAR, says: “The contract is a very good example of partnership and sharing of all the best that we and our foreign partners have achieved. These two rigs have been upgraded to world standards and are manned with excellent staff comprising well-trained and highly skilled people capable of meeting the challenges of drilling in the Caspian Sea. In addition to providing long-term job opportunities for about 300 people, the contract will also allow us to add to our joint drilling experience with our foreign partners.” 
David Woodward, BP Azerbaijan Associate President, said: “We welcome this new contract which will enable Azerbaijan’s two drilling rigs to be fully engaged in our major exploration and development activities in the Caspian for many years to come. This is an important contract that allows us to focus on the long-term, best-in-class development of Azerbaijan’s oil industry. We would like to thank GSF and SOCAR for their support in completing this contract, and working with us to find innovative long-term solutions to meet the needs of the exploration and development programmes ahead”. 
Notes to Editors 

1. The ACG PSA signed in September 1994, covers the 30 year development of the Azeri-Chirag-Gunashli (ACG) contract area. It is estimated that 5.4 billion barrels of oil will be recovered during that period. The field is being developed in several phases: Chirag has been producing since 1997 as part of the Early Oil Project (EOP). This was followed by Azeri Project Phase 1 - Central Azeri production, which started on February 13, 2005. Successive phases include West Azeri and East Azeri as Azeri Project Phase 2, scheduled to come on stream in 2006 and 2007 respectively, with ACG phase 3 - Deepwater Gunashli, sanctioned on September 20, 2004, and expected to begin production in 2008. The parties to the Azeri-Chirag-Gunashli (ACG) Production Sharing Agreement are: BP (operator - 34.1%), Unocal (10.3%), SOCAR (10%), INPEX (10. 0%), Statoil (8,6%), ExxonMobil (8%), TPAO (6.8%), Devon (5.6%), Itochu (3.9%), Amerada Hess (2.7%). 
1. The Shah Deniz PSA was signed in Baku on 4 June 1996. The discovery and appraisal wells drilled on the Shah Deniz structure during 1997-2001 confirmed the presence of a world class gas condensate field. The recoverable reserves of the Shah Deniz field are 625 bcm (22.1 tcf) of gas and 101 mm tonnes (750 mmbbl) of condensate, with potential for further hydrocarbons at deeper horizons. The full production potential of the field is about 16 bcm per annum which can be reached through later development stages. Production from Stage 1 will commence in late 2006. The parties to the Shah Deniz PSA are: BP (operator – 25,5%), Statoil (25,5%), the State Oil Company of Azerbaijan Republic (Socar - 10%), LUKAgip(10%), NICO (10%), Total (10%), and TPAO (9%).

3. The Inam PSA was signed in 1998 and a new exploration well in the Inam contract area will be drilled in 2006. The Inam partners are: SOCAR (50%), BP (operator - 25%) and Shell (25%) 


For further information please contact:
Tamam Bayatly, BP Baku Press office, telephone:      994 (0) 12 599 4557