ECONOMY
SOCAR SIGNS PSA CONTRACT WITH GERMAN UGE-LANSER FOR REHABILITATION OF FOUR OILFIELDS
Baku, June 3 (AZERTAC). President of the Azerbaijan State Oil Firm (SOCAR) Rovnag Abdullayev and manager of Germany`s UGE-Lanser Ltd Lofer Taushki have signed a Production Sharing Contract for rehabilitation of onshore oilfields Balakhani-Sabunchu-Ramana and Kurdakhani.
Speaking to the signing ceremony, the SOCAR president said the contract was signed for 25-year term with the right of its prolongation in case of success by 5 years more.
“UGE-Lanser Ltd (operator) will get a 75% equity stake in the project and SOCAR`s subsidiary 25%. The operator will undertake all SOCAR`s financial commitments on the contract,” Abdullayev said.
UGE-Lanser present its program of action 90 days after the contract is put into force.
“The program will specify volumes of investments, but according to our experience I can suppose that they will total hundreds of millions of dollars,” Abdullayev said.
The operator will pay a $2 million bonus after the launch of the contract realization and another $2 million after production exceeds the 2009 level 1.5-fold.
“The profit will be distributed on the standard basis of R-factor. We will begin from SOCAR`s stake of 55%, to grow up to 92.5% after recoupment of operator`s investments,” Abdullayev said.
The contract area is 16.14 sq km. UGE-Lanser Ltd has been cooperating with SOCAR for 5 years and has a joint venture Ecol Engineering Services with it.
Taushki says that the German company specializes in ecological and rehabilitation projects.
“We are glad to commence work at these four historical fields. We have conducted their all-round examination,” he added.
Negotiations about the contract started in 2008. Development at Balakhani-Sabunchu-Ramana has been conducted since 1871 and at Kurdakhani since 1914. Balance reserves of Balakhani-Sabunchu-Ramana make 7.3 million tons with production at the level of 208,200 tons and Kurdakhani - 205,000 tons and 730 tons respectively.