Baku, November 24 (AZERTAC). President Ilham Aliyev met with leadership of State Oil Company (SOCAR), as the Umid gas field had been commissioned in the Caspian Sea, which is one of the remarkable events in the country`s oil and gas history.

Speech of President Ilham Aliyev

-This morning, the President of State Oil Company informed me that the Umid field is discovered. This is a remarkable event. It is a great historic event. I would like to congratulate all employees of State Oil Company and the entire Azerbaijani people on this occasion because it will play a very important role in developing successfully oil and gas industry of Azerbaijan.

For a while, State Oil Company conducted exploration in Umid field. It is also another innovation for us. Following the long break, we started to carry out the entire drilling and exploration work in a big oil and gas field on our own resources. You know well that all fields at the Caspian sea were discovered by Azerbaijani oil specialists. Starting from 50-ies at the sea till present times, Azerbaijani oil specialists and works played the exceptional role. Our country played a leading role in delivering oil and gas resources of the Caspian to the world markets.

As you know, in the aftermath of collapse of the Soviet Union and even before, we started to feel the decline. At that time, we started to loose practically our positions. Our new oil strategy started by great leader Heydar Aliyev since 90-ies has resulted by the turning point in this field. The signature of the Contract of the Century and the Shahdeniz Contract and other steps enabled us to restore our positions in oil and gas field. We managed not only to restore our positions, but strengthen it very significantly. I expressed my views in this regard at the anniversary ceremony of State Oil Academy held yesterday. I would like to reiterate that today Azerbaijan has its own specific role on world’s energy map. Our positions are being fostered and all initiatives put forward by us are resulted by the creation of a new situation in this field.

Our oil and gas strategy is very successful and promising. It enables us to broaden significantly economic and financial resources of Azerbaijan. It boosted our international positions and resulted by the creation of thousands of jobs. Oil and gas pipelines connecting us with world markets were either repaired fully or reconstructed. It is not excluded that there will be a need to build new pipelines in the future.

If we shall consider that oil and gas reserves are increasing and our resources are sufficiently large and future probability of delivering resources of neighboring countries through Azerbaijani territory, then the construction of new pipelines is not ruled out.

Discovery of Umid field has a special significance. It shows that the entire work in oil and gas field is carried out successfully in Azerbaijan. We did not dispose larger financial capabilities in early 90-ies. We were dependent on foreign investments. We managed to ensure fully our national interests by bringing foreign investments into Azerbaijan. One of the countries and may be the first among them to join to the Extractive Industries Transparency Initiative is Azerbaijan. This is the indicator of our general oil policy.

PSA contracts signed with foreign partners ensure fully our interests and today the absolute majority of profit oil belongs to Azerbaijan. The absolute majority of employees working in foreign companies are the citizens of Azerbaijan. In the course of these years, our citizens traveled to foreign countries and had training in Azerbaijan by learning and studying modern technologies at the expense of foreign companies. It means that these contracts do not mean only the oil production or income sharing. It created also conditions to obtain development in other fields as well. Each dollar invested in oil field serves to bring the same amount of investments to other fields.

Civil engineering and service sectors have developed to greater extent in Azerbaijan. Both private and public companies profited from these possibilities.

The fulfillment of this entire work strengthened seriously our country. It is natural that after having gained these resources and particularly financial means, we started to make our own investments inside and outside the country. It constitutes already the current reality of Azerbaijan. It indicates our successful policy. It takes place not only inside the country. The amount of our investments abroad is measured by billions.

Our investments are awaited in Turkey, Georgia, Ukraine and other countries. Azerbaijan and its State Oil Company unveil their capabilities as a reliable partner. We undertake all measures to deepen the co-operation. Billions of investments we make in foreign countries ensure the interests of Azerbaijan. In the future, it will bring more benefits to us because all these investments are based upon economic factors. These are commercial investments. We know that we will generate more profits as a result of those steps. But, not today. It will happen in 5 or 10 years. Therefore, such investments have paramount importance. This is the investment made to the future of Azerbaijan. Future generations will see the results of those investments. We will also see it.

Besides that, investments made to the oil and gas sector, and particularly to the offshore fields of Azerbaijan have a special importance because all of us know well that investments made to a new field do not return in some cases. Azerbaijan signed several production sharing agreements. Some of them did not bring successes. However, Azerbaijani state did not incur even the slightest damage of that event because all investments were the obligations undertaken by foreign partners. Some wells were drilled but came dry. Here again, Azerbaijan did not get any damage because these expenditures were the responsibility of foreign partners.

Therefore, it was a risky idea when State Oil Company proposed and put initiative to carry out exploration work in Umid field using its own resources. At the same time, it demonstrated our ability to perform this task. We know well all opportunities present at the Caspian sea. Our geology specialists’ experience and knowledge do not lag behind the experience of geology specialists of the most leading oil companies, and I would even say it is greater. During last years, unsuccessful exploration work carried out by some foreign companies demonstrates this fact. I would like to recall our experience in Absheron field. I remember well that at that time, when we covered Absheron field in the contract for the first time, Khoshbakht pointed personally the place where the well should be drilled. Unfortunately, the opposite side did not heed to this instruction. They drilled the well in other place by spending millions and ten millions, and it came dry. In spite of that failure, we and our geology specialists knew that Absheron field disposes large resources. Following several years, another company shown its interest and the contract on Absheron field was signed. I hope that next exploration work in Absheron field will be successful and we will increase significantly our gas reserves.

I would like to point out once again that exploration and future production in Umid field has a special significance. This is an historic event. Azerbaijani State Oil Company carried this work on its own. We have both technical and financial capabilities. Our access to foreign financial resources in any quantity is ensured for us. I am very please that Umid field made our hopes come true.

Some days ago, I was informed about preliminary results of exploration work going on in Umid field. This allowed me to say a bit ahead of time: We await promising news from Umid field. But we are waiting till the full confirmation of this information and then we can issue a statement and declare that a new large gas field is discovered by Azerbaijani oil specialists in Azerbaijan. Of course, this event will cause a big interest not only in Azerbaijan, but also outside its boundaries. It shows also the fact that Azerbaijan became already a very big gas country. We are famous in the world by being the oil country. During the next stage in XXI century, Azerbaijan will raise its voice and does so already as a gas country.

Initiatives put forward by us and the implemented projects started to impact on world gas market. We have a diversified gas network. We dispose four gas pipelines, and our natural gas can be transported and is being transported at any destination. In case of additional measures, the transportation of natural gas will increase significantly.

To date, we were saying it very precisely that the proven gas reserves of Azerbaijan are at the level of 2 trillion cubic meters.

We added also that this volume may and is very probable to increase. So, eventual production in Umid field proves this statement. Simply to say, two trillion is a very modest figure. We have never provided false information about our resources to anybody. We exaggerated nothing. Even, on the contrary, we were prudent and always precise when speaking about our reserves. Therefore, our word is trusted very much at international energy level.

In a word, the discovery of Umid field is a great event. I congratulate and express my gratitude to all citizens and specialists who participated in this work. This field has a very promising future. Now, you will report preliminary information about reserves. But our experience shows that the preliminary figure is usually corrected afterwards. I remember preliminary results about reserves stored in Azeri-Chyrag-Guneshli field showed 511 million tons of oil. At that time, I was a bit surprised why 511 million tons? How it is possible to say so exactly? But, then the life showed that the reserves of Azeri-Chyrag-Guneshli field are not 511 million tons, but over 1 billion tons. Over one billion can suppose also 1.5 billion or even higher. The life will tell. Nobody can know it.

Therefore, I am sure that the preliminary information given about reserves in Umid field will put in more precise form as a result of work to be carried out in the future and a discovery of a new world class gas field will make a positive impact on world gas market.

The capabilities of Azerbaijan will broaden further and our gas import will increase even more. Sometimes, incorrect or biased information about gas reserves of Azerbaijan appears in the press report. I am confident that the discovery of Umid field will put an end to all these groundless talks.

I congratulate you once again wholeheartedly on the occasion of this remarkable event.

X x x

Delivering a speech, Rovnag Abdullayev, the President of the State Oil Company of the Republic of Azerbaijan said:

Mister President, thank you very much for assessing highly the work of oil specialists.

You, Mister President, you were always with oil specialists and supported them always while working on Umid field. Today is a special day and I can proudly report you that during the period of engulfing world crisis, we started it with your encouragement and support. We started to work in Umid filed considered by specialists as a risky and very complicated field. During short period of time - two years - we have taken already preliminary results. Now, we say with confidence that a large natural gas condensate field is tapped already in Azerbaijan.

Excellency, allow me to stress our gratitude on behalf of oil specialists and congratulate you. Mister President, this is your success. We could not achieve such results without your support.

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First vice president of SOCAR Khoshbakht Yusifzade inoformed the head of state about feasibility study of several natural gas fields in Azerbaijani sector of the Caspian. Speaking about Umid field discovered by Azerbaijani oil specialists back in Soviet times, Khoshbakht Yusifzade said:

Umid field is located 75 km away from Baku while its offshore distance is 40 km. In 1953, the first geophysical work was carried out here. Then, another round of more comprehensive work was completed in 1972. Afterwards, we drilled here 9 wells from 1977 till 1992. None of these operations did reach this horizon and we could not get this field.

Finally we came to a decision to drill a well with your assistance and encouragement. Of course, the current State Oil Company is not the same as it was in 1994. Now, State Oil Company has both financial and technical means. Besides that, we had to learn a new technique. Therefore, it was a very risk work. I would like to point out two moments. In general, drilling well is not bored via platform. There is no such practice in the world. Wells are drilled from platform just to define boundaries of a newly discovered field. But, a drilling well is not bored from platform for an incompletely discovered field.

All wells were drilled by Khazar type floating drilling facility. It can work at the depth of 60-70 meters.

Previously we thought to use drilling facilities. Then, we concluded that it will be more efficient to drill from a platform. But, it became expensive by 2 times. Therefore, this platform is a risk. In this case, our second big work was to project this platform for 6 wells. The positive side of this work is explained by the fact that you leave the place after you finished to drill using drilling facility. But due to the presence of a platform here, we can drill another 5 wells with even the first successful one. Drilling process was difficult and carried out in complicated conditions. But, we hit the target and reached the 5th horizon. It means that there should be also 6, 7 and 8th horizons also.

According to the results of analysis of geophysical data and rock samples, we can say with full confidence that we discovered a huge field here. Now, we can say firmly that there are 200 billion cubic meters of gas and 30-40 million tons of condensate. According to the current information, both of them total 250 billion cubic meters.

Now, we have a task to reach the 8th horizon of this field. While drilling the first well, we accumulated some experience. Of course, it will be easier for us to drill the second well. The first well was a good lesson for our specialists because that was not the case in our practice. Now, what does the information about this filed promise to us? I do not want to talk a lot, dear President. First of all, we have to continue exploration work in this field and drill also other wells.

But, one of the most important issue is explained by the fact that the promising future of this well proves that Babek field is two much higher that Umid. Good results in Umid increase the prospective of Babek by two times because Babek is located downwards this structure and its reserves are higher by two times. It means that if reserves in Umid will be 200 billion cubic meters, then it will total 400 billion cubic meters in Babek. Otherwise, if Umid will be 300 billion cubic meters, so Babek will be 600 billion cubic meters accordingly. Currently, we have one well in Umid field. This well was drilled offshore in the area with depth of 170 meters. Thanks God, after we will commission that well, then we will continue our work with your assistance. I think that if we will get good results, then we will able not only to increase our experience, but to carry out Babek work on our own.

In general, according to the data obtained, I can say with confidence that if we dispose proven gas reserves of 2 trillion cubic meters, then we could have at least another 2 trillion cubic meters in prospective.

X x x

Concluding the meeting, President Ilham Aliyev said:

-Thank you very much for interesting presentation. I also agree fully that we should work in Babek on our own.

I remember it. In fact, they were aside - Umid and Babek. Foreign companies also had a big interest to these fields. It is great that we kept these fields and conduct the entire work independently. Of course, we should carry out the total work in Babek field on our own.

As you said, we accumulated not only experience, but can state with high probability that the exploration will go on also there. It means that we say it already now. It is exact. Therefore, the discovery of Umid field can result by discovering largest gas fields.

This day will enter into the history as the big exploration day of State Oil Company. I hope that all other work will be finalized also in nearest future and we will produce early gas there. In any case, this will happen in several years. But, we know already precisely that Umid field will contribute to the gas potential of Azerbaijan. I would like to say once again that our role will increase in European and world gas markets.

Azerbaijan will develop further both in oil and gas fields as well as in all other fields. The prospective in front of our country is very promising and we look at the future very optimistically. The main reason is explained by such a great work done in oil and gas industry of Azerbaijan. As usual, Azerbaijani oil workers make their very valuable contribution to the development of country.

I am very pleased that Umid field was discovered in independence period. If it would be tapped in 50-ies or 70-ies, then its gas reserves could have been exhausted long ago. This is also an historical justice. Azerbaijan contributed strongly to the world oil industry. We gave truly so many contributions. In Second World War, results of war could be absolutely different with the oil of Azerbaijan. These fields left for us so safe is a big gift bestowed by Allah. Today, these fields serve to the independent Azerbaijan and will foster our country in decades to come. I congratulate you once again. 

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