Petronas and SOCAR have signed a Memorandum of Understanding (MoU) to explore, develop and produce hydrocarbons from an offshore block in the Caspian Sea.
Under the agreement, the Azeri oil company and the Malaysian state oil and gas firm will collaborate on the Goshadash offshore project in the Azeri section of the Caspian Sea.
The agreement gives the companies 6 months to agree on the terms and conditions of the production sharing contract for the project, media sources reported.
Petronas and SOCAR Jointly Explore Oil Offshore
The offshore project is located 24 miles in the north-western part of the Absheron archipelago in the Caspian Sea, in water depths of 33 to 164 feet.
Petronas is already present in Azerbaijan, with a 15.5% interest in the country’s Shah Deniz gas field that it acquired from Statoil for $2.25 billion in October 2014.
In August 2016, the companies had already reported they would sign this agreement for Petronas to conduct a full range of studies in the area, including a seismic survey.
If the results were successful, the companies would start discussing a development contract, SOCAR said at the time.
Azeri Production Stabilises
Additionally, SOCAR announced it will try to keep the current production plateau on the main oil field in the Caspian Sea, the Azeri-Chirag-Gunashli (ACG), for several years.
The field produced 31.3 million tonnes of oil in 2015, and the expectation is that it will produce the same amount this year and in 2017.
According to estimates by SOCAR, the ACG holds reserves of approximately 1 billion tonnes of oil and the company already extracted 40% of the reserves.
In Absheron, SOCAR expects the first volumes of gas to be extracted in 2019.
The final investment decision should be taken in the fourth quarter of 2017 and the first production well should be drilled in the third quarter of 2017.