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BP inks fresh pact with Socar

New 25-year agreement covers exploration of Caspian Sea block off Azerbaijan

BP has signed a new long-term production sharing agreement with Azeri state oil company Socar for the joint exploration and development of a block in the Caspian Sea.

Under the terms of the 25-year agreement, BP will be the operator of Block D230 during the exploration phase and will hold a 50% stake. Socar will hold the other 50% interest.

Block D230 lies some 135 kilometres north-east of Baku in the North Absheron basin in the Azerbaijan portion of the Caspian Sea. It covers an area of about 3200 square kilometres and has not previously been explored. It has water depths of 400 to 600 metres and anticipated reservoir depths of about 3500 metres.

The signing of the agreement follows a memorandum of understanding for exploration of Block D230, which was agreed in May 2016.

The newest agreement was signed in London by BP chief executive Bob Dudley and Socar president Rovnag Abdullayev. UK Prime Minister Theresa May and Azerbaijan’s President Ilham Aliyev attended the signing.

BP's Dudley said: "This agreement underpins a new joint effort by Socar and BP to explore further Caspian opportunities in support of long-term production in Azerbaijan. We have now been operating in the region for more than 25 years and believe there is still significant oil and gas potential there. We look forward to continuing to build on our significant business in Azerbaijan, working closely with Socar and others to explore and help secure the Caspian’s future for decades to come."

The deal follows two recent production sharing agreements signed by BP and Socar. The companies signed deals for the Shafag-Asiman offshore block in 2010 and for the shallow-water area around the Absheron Peninsula in 2014. Under both agreements, seismic programmes have been completed and work for drilling plans continues, BP said.

Socar's Abdullayev said: "We have a long tradition of successful cooperation with BP. I believe that the synergies between modern upstream technology and unique historical experience, embodied in both companies, create a solid basis for our continued success. Being based on fair and equal conditions, today’s agreement will become an important milestone in the pursuit of the highest degree of efficiency in the joint development of the natural resources of Azerbaijan."

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