BP signs Caspian Sea deal with Socar

BP has signed a production sharing agreement to explore and develop a virgin deepwater oil and gas prospect.

Tamsin Carlisle LONDON // BP has signed a production sharing agreement with the Azeri national petroleum company Socar to explore and develop a virgin deepwater oil and gas prospect in the Caspian sea.

The deal is the first signed by BP's new chief executive, Bob Dudley, who took over from Tony Hayward on October 1. It indicates that the company is intent on expanding its footprint in the eastern hemisphere after its disastrous oil spill in the Gulf of Mexico, which may have diminished its development prospects in the West.

"This is an important day for Azerbaijan and BP as it marks the beginning of our bilateral co-operation in exploration and development of a new offshore block," Mr Dudley said in Baku, the Azeri capital, at a signing ceremony that was also attended by Rovnag Abdullayev, the president of Socar, and Rashid Javanshir, the president of the BP unit BP Azerbaijan.

"With Socar and our partners, BP has helped to establish Azerbaijan as a world-scale oil and gas producer, and I believe the significant remaining potential will continue to make it relevant for decades to come," Mr Dudley said.

"We in BP very much hope that the combination of our leading technology and expertise with Azerbaijan's experience and potential will lead to new discoveries in the Caspian."

Under terms of the 30-year concession, BP and Socar will each hold a 50 per cent interest in the Shafag-Asiman block in the Azeri sector of the Caspian Sea.

The unexplored block lies about 125km south-east of Baku and covers an area of about 1,100 square km. Water depth in the area is 650 to 800 metres, and the drilling target is some 7,000 metres below the sea bed.