A company owned by Azerbaijan's state-run oil company, Socar, signed a $1 billion deal Tuesday with a division of Singapore's Keppel Corp. Ltd. to build an off-shore drilling rig in the Caspian Sea.
The rig is expected to be completed by late 2016, company officials said.
"It will be a new generation drilling rig that will be able to drill at a depth of 1,000 meters and to record depths of 12,000 meters [below the surface]," said Socar President Rovnaq Abdullayev.
Negotiations were underway for the construction of another floating drilling rig, he said.
"We have already started negotiations on [the] construction of a second rig that would be used for drilling at the Absheron gas field which is operated by France's Total S.A. (TOT)," he said. Reserves at that field are estimated at up to 300 billion cubic meters.
Mr. Abdullayev said that despite Azerbaijan having abundant oil and gas projects, a lack of such drilling rigs is hampering exploratory drilling.
Azerbaijan, which is targeting gas exports of up to 50 billion cubic meters a year by 2025, aims to become a major supplier to Europe.
Azerbaijan has three semi-submersible rigs which can drill at depths of 350-400 meters and 7,000-7,500 meters beneath the surface.