AZERBAIJAN Caspian fields nearing development by AIOC

Babayev Ali Aslanoglu Contributing Editor - Baku Villa Petroleri, head office of AIOC. In Azerbaijan, every step toward the realization of the long sought development of the country's petroleum resources is an occasion for celebration. Last August 24th, for example, two such important steps took place - the official inauguration of the new Azerbaijan International Operating Company offices, and the official startup of drilling by the referbished semisubmersible Dada Gorgud.

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Babayev Ali Aslanoglu
Contributing Editor - Baku
5702off06
Villa Petroleri, head office of AIOC.

In Azerbaijan, every step toward the realization of the long sought development of the country's petroleum resources is an occasion for celebration. Last August 24th, for example, two such important steps took place - the official inauguration of the new Azerbaijan International Operating Company offices, and the official startup of drilling by the referbished semisubmersible Dada Gorgud.

The first event seems of little significance, but it marks the establishment of the company charged with carrying out the "Contract of the Century" as it was called by Azerbaijan President Heydar Aliyev, the contract to develop the the combined Azeri, Chiraq, and deepwater Gunesh Fields.Called the Villa Petrolea, the 6,800 sq meter building was built in 1920-30, but refurbished by AIOC over the past two years. Some 300 employees now work there.

The Dada Gorgud began life as the Kasmorneft when christened in 1981, but was also refurbished by AIOC over the last two years. Santa Fe carried out the rennovation at a cost of US$38 million. The rig departed Baku docks in September to its first drilling site in the contract area, where it is now drilling several appraisal wells.

These are but the latest steps taken by AIOC toward the goal of Azerbaijan becoming a key exporter of petroleum. Other achievements have already been made, including:

  • Creation of infrastructure which is necessary for the realization of the contract.

  • Evaluation of existing oil industry components that may be useful in carrying out the contract.

  • Conduct of geological and geophysical surveys over the contract area.

    The primary focus of infrastructure was to provide the necessary marine, helicopter, warehouse, dockyard, construction yard, and accommodation facilities to support the work program. A marine survey team from BUE Marine (UK) assessed the suitability of existing Caspian vessels for geophysical and environmental surveys, and as support vessels for drilling and construction operations. BUE Marine had also been selected as the company to provide refurbishment and management of the marine vessels. The vessels Neftegas 64 and Tofiq Ismailov were both upgraded for AIOC survey work. Kaspmornefteflot, a large local company, has traditionally provided marine vessels to the offshore industry in Azerbaijan. Their vessels, the Neftegas 62, Aurki, Yarenga, and Tofiq Khalibei

  • have been taken on long term charter by AIOC. Upgrades of the Neftegas 64, Tofiq Ismailov, Aurki, and Teibriz Khalibei

  • were carried out in Azerbaijan, while upgrades of the Neftegas 62 and Yarenda were carried out in UK and brought back to the Caspian Sea via the Volga River. In addition, the crew boat Magie 1 was purchased by AIOC from Tidewater (UK) and brought into the Caspian Sea.

    To provide 24 hours helicopter support services, AIOC negotiated the formation of an Azerbaijan-Canadian joint venture company, East-West Helicopters, which employs a Sikorsky S76A for passengers and a MIG 8 for freight services.

    Supply bases have been leased from Mc Dock and Mc Shelf (both Azerbaijan-USA joint ventures in respect of jetty and open storage. Refurbishment of an AIOC warehouse is nearing completion. An AIOC operations camp with accommodation and office facilities for 120 men and women has been constructed, and additional facilities to support the Early Oil Project are now being constructed - the camp to support the North route of Early Oil Project was constructed in Devichi, approximately 120 km to the north of Baku.

    Evaluation of existing constructions has followed two principal directions. First was the estimating of the possibility of using the marine deepwater platform Chiraq-1 for the "Contract of the Century." The Chiraq-1 platform was constructed on the Chiraq Field by Socar, the State Oil Company of the Azerbaijan Republic, before the "Contract of the Century" was signed. Afterward, AIOC and Socar specialists and engineers from Brown and Root (USA) carried out extensive surveys, engineering, and computer simulation studies of the platform. Upon completion, they decided to use the platform for early oil production. AIOC paid Socar $17.6 million for the Chiraq and has begun installation of necessary drilling and oil production equipment on it.

    The second direction was the estimation of the possibility of using Azerbaijan infrastructure necessary for both the northern and western pipeline routes. A team of technical specialists from AIOC, Socar, and Flour Daniel (UK) conducted field surveys and technical testing of the existing pipeline system in order to assess the technical feasibility of using them to export early oil. These evaluations are now concluded, and upgrading of both will begin soon.

    It should be noted that, as a part of the geological exploration, a 3D seismic survey (the first in the Caspian Sea) was successfully completed over the entire contract area by the Azerbaijan-USA joint venture Caspian Geophysical, using seismic vessels Baki and Geofizik-1. Approximately 31,000 sub-surface km of full-fold seismic data of international standard were acquired.

    An environmental study of the contract area was at the center of attention of AIOC. These studies were carried out with the participation of representatives of Socar, the scientific community, and appropriate Azerbaijan authorities in order to determine the status of the environment within the contract area prior to appraisal drilling and offshore construction activities. (It should be noted, that the environmental situation in the Azerbaijan sector of Caspian Sea is not good today; many environmental problems have not been solved and cooperation in this area will be very useful for Azerbaijan specialists to learn modern methods of improving the environment.)

    The contract for development of the Azeri-Chiraq-Gunshei Fields was signed in September of 1994. Total reserves are estimated at 540 million tons (4.1 billion bbl) oil. Total contract investment will be about US$8 billion. The development by the AIOC consortium, which consists of 11 foreign oil companies and Socar, will take 30 years. It is expected that Azerbaijan will reap the benefits of some $94 billion from the overall development and production of the fields. Full production should reach 700,000 b/d in 2010. (For comparison, Azerbaijan earned only $0.5 billion in foreign exchange in 1995.) The "Contract of the Century" has a great political mean for Azerbaijan Republic, too.

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