• Natural Gas News

    Iran, Azerbaijan Discuss Joint Caspian Projects



Azerbaijan and Iran look at the possibility for cooperating in a thorny area offshore

by: Iran desk

Posted in:

Natural Gas & LNG News, Corporate, Exploration & Production, Political, Ministries, Caspian Focus, News By Country, Azerbaijan, Iran

Iran, Azerbaijan Discuss Joint Caspian Projects

Iran and Azerbaijan have agreed in principle to develop jointly a disputed oil field in the Caspian Sea, which Baku calls Araz-Alov-Sharg and Tehran calls Alborz, but they have not agreed the details.

Azerbaijan’s president Ilham Aliev visited Tehran on February 23 and state Socar sealed two memorandums of understanding with Iran, but neither was related to the block, which Iran claims holds 2bn barrels of oil.

However, Iran’s oil minister Bijan Zanganeh said on February 23 that it would propose co-operating on the block with Azerbaijan.

And Iran’s president,Hassan Rouhani, during a press conference with Azeri partner on February 23, said that “we held constructive talks on the issues of oil and gas, as well as joint production of oil and gas resources in the Caspian Sea.” 

A source close to negotiations told NGE that the sides had already reached a primary agreement to develop the block jointly, but they had not finalized the details.

Another industry source said the decision over oil and gas blocks in the disputed area is not just a financial issue, but political. ”For instance Iran’s Amir Kabir rig in another block (Sardar-e Jangal) has been idle for more than a year, but moving the rig is a question for the country’s foreign ministry. Iran’s North Drilling Company has finished drilling two wells in the block and the rig should have moved to shallow waters, close to Iran’s offshore border with Turkmenistan, but the oil ministry had to extend the contract for more 6 months before it had  the foreign ministry’s approval,” the source said.

In mid-February, industry sources told NGE that Socar and its partners in Araz-Alov-Sharg – BP, Statoil, ExxonMobil, Canada’s Encana and Turkey’s TPAO – had abandoned the contract for the project, almost 20 years after signing a production-sharing agreement.

Rouhani, did not identify the oil and gas projects proposed for joint production between Iran and Azerbaijan, but Iran offered three blocks (24, 26 and 29) as well as Sardar-e Jangal field in the Caspian Sea to foreigners in November 2015, as it unveiled a prototype upstream agreement, the Iran Petroleum Contract. Iran has divided its exploration area in the Caspian Sea into 46 blocks, of which eight have priority.

Iran has a 10% share in Azerbaijan's Shah Deniz gas field. The first phase of the field become operational since 2007 and currently produces about 10bn m3/yr and the second phase with 16bn m3/yr of output capacity is projected to start by 2019.