Lukoil, one of Russia’s leading oil and gas operators working in the Caspian Sea region, has entered into talks with SOCAR to negotiate a stake in the offshore Umid-Babek project. Azerbaijan’s state oil company SOCAR has partnered with Nobel Upstream, an independent UK company, since 2008, exploring and appraising the block, which is located on a site around 75km from Azerbaijan’s capital Baku.
Umid-Babek Discovery
and Complexities
The Umid gas
field was discovered by SOCAR and Nobel Upstream in 2010, when it was hailed as
the biggest offshore gas field discovery in Azerbaijan since Shah Deniz, which
was discovered in 1999. Pilot production was launched at Umid in 2012, and a
total output of 1.8 bcm of natural gas together with the associated condesate
has been achieved since then. During this time the Babek prospect also
underwent 3D seismic acquisition. However, further appraisal was deferred until
a Risk Service Agreement (RSA) between SOCAR and Nobel Upstream could be
completed. Having executed the RSA in 2017, SOCAR and Nobel Upstream have
recommenced appraisal and have begun seeking an international operating partner
with the technical experience required to operate a complex, deep, high-pressure
offshore gas field.
Lukoil Operations
Lukoil has a
strong presence around the Caspian Sea area, with two gas fields having entered
production and several more under operation in the Russian section. The Lukoil
group announced plans to acquire two subsea blocks earlier in 2018, located offshore
Kazakhstan. Lukoil’s Chief Executive Officer Vagit Alekperov commented that the
company was counting on new assets and negotiating with SOCAR in regard to the
Umid-Babek development.
Gas Output
Data
collected by SOCAR suggests that the Umid-Babek field contains an estimated 600bcm
of natural gas, along with condensate totalling around 800 million barrels. SOCAR
and Nobel Upstream intend to install two production platforms at Umid-Babek, with
production starting in 2022 for Umid and 2023 for Babek. The annual output of
gas from Umid-Babek can be sold domestically in the Azerbaijan market, or
externally via export through the Southern Gas Corridor, which is due for
completion in 2020.
