LUKoil pulls out of offshore project in Azerbaijan

Feb 26, 2009 01:00 AM

Russia's LUKoil Overseas has announced that it is pulling out of the D-222 block (Yalama) exploration and development project, offshore the Azerbaijan section of the Caspian Sea.
Andrey Kuzyaev, the President of LUKoil Overseas, told that the project in which France's GdF Suez also holds a 15 % stake after acquired part of LUKoil's participating interest last year doesn't hold commercially exploitable oil. According to him, the foreign shareholders in the project now have no outstanding obligations before the State Oil Company of Azerbaijan (SOCAR).

Prior to this, LUKoil Overseas had completed seismologic and other necessary exploration work and drilled two exploration wells. After reaching 4,500 meters deep, the group found no hydrocarbon reserves there.
Initially, LUKoil (60 %) and SOCAR (40 %) signed exploration, development and production sharing agreement on the block on July 3, 1997.

D-222 Block, straddling Azerbaijani and Russian sectors of the Caspian Sea, is part of Yalama Structure that is 70-80 meters far from the shore.
Yalama was first estimated to hold 800 mm barrels of oil and 50 bn cm of natural gas. The project costs $ 2.5 bn in investment. Growth of capacities on processing of crude oil by 2014 will make up 2,5 mm ton.

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