Equinor Preparing to Drill at Azerbaijani Field
Norwegian multinational energy company Equinor recently announced the plan to drill the first well in the Aypara area; located in the northern part of the Azerbaijani Caspian littoral. It will be possible to begin drilling in spring 2020; however, the project’s future will become clearer after the completion of drilling at the Karabakh field.
Business Relation between Equinor and Azerbaijan
Equinor has been a partner in Azerbaijan’s industrial and economic sector since 1992. With the State Oil Company of Azerbaijan Republic (SOCAR) and other international companies, Equinor has worked both industrially and socially to construct Azerbaijan’s burgeoning oil and gas market to realize its full potential. Today Equinor is mainly interested in the Azeri-Chirag-Gunashli (ACG) oil field. Equinor has equally vested interest in the Baku-Tbilisi-Ceyhan (BTC) pipeline, which runs from the Azerbaijan capital of Baku to the south Turkish port of Ceyhan on the Mediterranean. The BTC pipeline is the main export route for the ACG oil.
The ACG project began with a 30-year Production Sharing Agreement (PSA) for ACG oil field that was signed in September 1994. The project was extended for another 25 years in September 2017, until the end of 2049. Equinor has a 7.27 percent interest in the extended ACG PSA. British Petroleum (BP) is the operator of ACG. Equinor also obtained an 8.71 percent interest in BTC project. Current BTC throughput including ACG oil is about 650 million barrels per day. Additionally, last July Equinor signed two agreements with Azerbaijan’s state oil company SOCAR. The first agreement is a risk-service agreement on the Karabakh field in the Azerbaijani Caspian littoral, while the second is a production sharing and exploration agreement on the Dan Ulduzu, Ashrafi and Aypara oil fields.
Equinor, in collaboration with the Norwegian government, has backed the Azerbaijani government in setting up an oil fund based on the Norwegian model; as well as driving Azerbaijani technical growth through partnerships with SOCAR and students. Equinor supports a partnership between the State Oil Academy of Azerbaijan and the Norwegian University of Science and Technology (NTNU). The United Nations Development Program facilitates this partnership. Equinor also cooperates with Khazar University and the Diplomatic Academy of Azerbaijan.
Drilling plan in the future
According to Equinor’s project, the well at Aypara will start in spring 2020. It will be drilled vertically to the depth of 3,400 meters (11,154.9 feet) with the water depth of 140 meters (459 feet), which will take two or three months. The Aypara structure is located 25 kilometers (15.5 miles) northwest from the Azeri-Chirag-Guneshli (ACG) field and 90 kilometers (55.9 miles) away from Baku. The exact starting time will be clear after drilling at the Karabakh field ends.
On March 13, Azerbaijan’s Caspian Drilling Company Ltd. (CDC) and Norwegian Equinor Azerbaijan Karabakh BV (Equinor) signed a contract for the drilling services at Karabakh field of Azerbaijan. Depending on the completion of reconstruction and modernization of the Dede Gorgud semi-submersible drilling rig, Equinor plans to begin drilling at the Karabakh field in late September or early October. Reconstruction and modernization of the rig is being carried out at the shipyard of CDC. Drilling at the Karabakh field will last approximately three months or more depending on the progress of the work.
Azerbaijan is one of the world’s oldest oil-producing countries and is a crucial oil and gas supplier in the Caspian Sea region, however, Azerbaijan’s oil production of crude has declined by more than 20 percent since its peak in 2010. The country’s intention is clear: promote the development of new oilfields while minimize the “sharp output decline” risk. Since Equinor’s ambition is to be the world’s most carbon-efficient oil and gas producer, it won’t give up Azerbaijan’s large deposit and will develop a more solid relationship with the country.
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