Azerbaijan ratifies accord on Zykh and Govsany fields

Jun 12, 2001 02:00 AM

The Parliament of Azerbaijan has ratified the agreement on rehabilitation, prospecting, development and production sharing for the Zykh and Govsany fields. The agreement was signed between the State Oil Company of the Azerbaijani Republic and Russia's LUKoil in Baku on January 9, 2001, during the official visit of President Vladimir Putin.
Both oil fields are located in the southern sector of the Apsheron coast. They have been developed by Azerbaijani companies for more than 50 years. Their overall residual stock is 33.3 mm tons. The total area of the two fields is 128 sq km, 52 of which need rehabilitation.

The two companies will have an equal share in the further development of the fields. The share is preliminary estimated at $ 215 mm, the Russian company will invest in the fields development within six years in order to make the annual output 600,000 tons by 2007. Only 64,000 tons of oil were extracted on the fields in 2000.
The additional prospecting will last for three years, and no less than two wells will be drilled within that period. A month after the agreement enters into force LUKoil will pay $ 1 mm to Azerbaijan. It will pay $ 2.5 mm more for every 100 mm barrels of oil found on the Zykh and Govsany fields. The agreement is signed for the period of 25 years.

Source: Itar-Tass via Newspage
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