Baku, April 23, AZERTAC
President of Azerbaijan Ilham Aliyev has approved the law adopted by Milli Majlis on ratification of the exploration, development and production sharing agreement (PSA) for shallow waters of Absheron Peninsula between the State Oil Company of Azerbaijan Republic (SOCAR) and BP Exploration (Azerbaijan) LTd.
The PSA was signed on December 22, 2014 and ratified by the Parliament on April 14, 2015. For implementation of the PSA President ordered the Cabinet of Ministers to ensure that all the governmental commitments are met.
The agreement’s term is 23 years with possible extension. It provides for parity (50%) participation of both sides.
The Agreement takes into account all SOCAR’s risks, as the Company will undertake commitments on financing its share only if BP finds a prospective structure within the exploration works, confirms the availability of commercially profitable volume of oil at such structure and prepares a program of the field development within 6 month term. Only in this case the State Oil Company will start meeting its liabilities. In other cases, if the efficiency of the field is not confirmed or if it’s not found, SOCAR will not cover expenses of the second party.