27th March 2018 – London
A recent announcement made by a UK-based oil and gas company, Nobel Upstream, shows that the independent firm specialising in the exploration and production of oil and gas has signed a Risk Service Agreement (RSA) with the State Oil Company of the Azerbaijan Republic (SOCAR). The aim is to carry out operations of varying scope within the Azerbaijani sector in the Caspian Sea. SOCAR is Nobel Upstream’s joint venture partner in all aspects of oil and gas exploration and development in the enormous Umid-Babek gas condensate field located in the area.
The Azerbaijan Parliament (Milli Majlis) endorsed the Risk Service Agreement which was later signed into law by the President of the Azerbaijan Republic on 2 May 2017. The role that SOCAR is taking in Azerbaijan’s first and most innovative RSA ever is beyond any that the group has previously undertaken. The agreement will facilitate cooperation via a production sharing arrangement similar to Production Sharing Agreements between many of the world’s largest oil and gas corporations (including Shah Deniz and Azeri-Chirag-Deepwater Guneshli (ACG) – projects operated by BP, Absheron – a development that is operated by Total) and SOCAR – which will also govern and monitor all activities carried out by companies working in the area to ensure that the rights of the stakeholders are duly protected.
The Umid Babek Exploration and Production company has been jointly established by Nobel Upstream and SOCAR, and will be the contractor under the RSA. Nobel Upstream holds 20% of the Umid Babek Exploration and Production company. According to the CEO of Nobel Upstream, Larry Bates, the company is pleased about the partnership with SOCAR, and is looking forward to a stable, long-term relationship between the two firms. Mr. Bates confirmed in a statement that the Umid-Babek field will “provide a stable and long-term gas supply for the Azerbaijan and other European markets.”
The Umid-Babek Field is a gas condensate field which is thought to house more than 600 BCM (billion cubic meters) of gas reserves. The field is also thought to contain in excess of 800 million barrels of condensate. Success in the area would see the Azerbaijan and European markets supplied with as much as 3-4 BCM annually. European markets would be supplied via the Southern Gas Corridor which will run from Azerbaijan to Italy. While SOCAR and Nobel Upstream discovered the Umid field in 2010, no wells have yet been drilled on the Babek prospect. 3D seismic acquisition has recently been completed on the Babek side, while appraisal drilling has continued on Umid.
Nobel Upstream is a UK-based company which operates in three primary markets – in Azerbaijan, in the UK North Sea, and in the Permian Basin in Texas, USA.