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President Approves BP-SOCAR Deal

Azerbaijan's President Ilham Aliyev has approved the law adopted by the Parliament on ratification of the exploration, development and production sharing agreement (PSA) for shallow waters of Absheron Peninsula.

The agreement was signed between British BP and Azerbaijan's state energy company SOCAR on December 22, 2014. This agreement is part of the government's plan to fully explore all the coastal areas of the Azerbaijani sector of the Caspian Sea.

The agreement term is 23 years with possible extension. It provides for parity (50%) participation of both sides.

The area of water, covered by the PSA agreement, extends along the southern part of the Absheron Peninsula. The sea depth is up to 40 meters in this territory, but the depth of the potentially productive strata is 3,000-5,000 meters.

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 SOCAR 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.

In Azerbaijan, BP operates under several production sharing agreements and host government agreements (HGAs) signed with the government of Azerbaijan. The projects operated by BP Azerbaijan are the Azeri-Chirag-Deepwater Gunashli (ACG) oil field, the Shah Deniz gas and condensate field, and three export pipelines: Baku-Tbilisi-Ceyhan, South Caucasus Pipeline and Western Route Export Pipeline.

SOCAR is involved in exploring oil and gas fields, producing, processing, and transporting oil, gas, and gas condensate, marketing petroleum and petrochemical products in the domestic and international markets, and supplying natural gas to industry and the public in Azerbaijan.

Source: AzerNews

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