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Caspian business plan of LUKoil
Company’s attention focused on several projects
In 2002 budget, LUKoil has envisaged the investment of $ 75 million in floating drilling rig upgrading. Total investment in the rig construction is currently estimated to make $ 225 million. «We intend to launch this unit by the end of 2003- beginning of 2004», the head of LUKoil, Vagit Alekperov, stated at the ceremony held in Baku and devoted to the 10th anniversary of this world-known Russian oil company. According to him, it has been, already, determined that the company will drill with this rig 5 exploration wells including the «Yalama» prospective structure. Drilling of the latter will be performed both, in the Azeri and Russian sectors of the Caspian, as this is the frontier field.
«Shelf-7» budget
The «Shelf-7» drilling contractor is not determined, yet, as the corresponding bid has not been invited. The rig will be constructed in Astrakhan and Baku, and the matter of its upgrading in the Baku yards will, in future, be considered with the Azeri side. As for the extension of the «Yalama» offshore project exploration term, the president of LUKoil noted, that the signed PSA agreement says that the prospecting will begin when the «drilling tool» is available. «We don’t have such a «tool» in the Caspian, today, and therefore, our address regarding extension of the geological prospecting period until the «Shelf-7» rig is launched, is quite objective», V.Alekperov stressed. At the same time, LUKoil will submit to SOCAR the schedule of the new rig launching, and the term of the prospecting wells drilling. The matter of attraction of the potential investors in the project that could share with LUKoil the costs on the rig has not been considered, yet, as the Russian company intends to use the rig, individually, for conducting the geological works in its contract areas.
Slack project
The rate of LUKoil’s negotiations with Azerbaijan on new offshore projects is not so fast. The company negotiates with SOCAR the joint development of the offshore prospective structures D-8/D-10/D-11 in the South Caspian. V. Alekperov, however, referred to these negotiations as «slack», as the blocks are rather complicated and deep. «They have, almost, no geophysical data, and there are many problems the solution of which needs time», V. Alekperov noted.
SOCAR also admits that the consultations on the D-8/D-10/D-11block and other prospecting projects are not very active, as the Foreign Investment Department of SOCAR (FID) is very busy with the pipeline projects. This summer SOCAR intended to conduct 3D seismic survey in the region of D-8/D-10/D-11 block located in the South Caspian. The survey were suspended because of the intensified of antagonisms with Iran regarding the frontier oil structures.
At the same time, V.Alekperov confirmed that the considered alternatives of the «Karabakh» field re-development had turned out to be economically inefficient for LUKoil. «This project does not interest us, even if «Karabakh» is merged with the neighbour block of «Dan Ulduzu», «Ashrafi», the president of LUKoil noted.
At the beginning of this year the Russian company began the initial study of the «Karabakh» field region, where CIPCO had discovered inconsiderable oil reserves. In 1998, CIPCO having drilled three exploration wells in the «Karabakh» decided that beginning of oil production in that area would be commercially inexpedient. The exploration resulted in discovery of field with approximately 7 million tons oil and about 2- billion cubic meters of gas. Alberta Energy was also interested in possibility of this field development.
Scared by ecology
LUKoil is also finalising the preparation for beginning of rehabilitation and development of the onshore block of the «Govsany» and «Zykh» fields in the Absheron peninsula. By the end of October, the Oil and Gas Producing Division (OGPD «Gum Adasi») will be transferred from SOCAR to the project operator.
«All documents have been agreed upon, however, there is number of difficult matters», the head of Russian company said. First of all, these are environmental problems in the block, that may not be neglected.
«We may not undertake the risks, especially, environmental, that existed there prior to us, these. namely, are the contaminated areas and a number of unsealed wells», V. Alekperov noted. In this connection, LUKoil has, already, conducted the detailed audit of the contract area, including the environmental. «Today, these matters have, already, been agreed with the Azeri side, and we undertake the whole responsibility after signing of the joint document about the transfer of the division», Alekperov informed.
The president of Russian company also noted the changes in the investment program in «Zykh»-«Govsany» project, the estimated reserves of which make 17-20 million tons oil. He also said. that the investment value (about $250 million) in the project remains unchanged. «We want to reduce the exploration term and start the field production as soon as possible», stressed he. For this reason, LUKoil is clarifying now its 2002 budget in Azerbaijan. From the beginning of its activity in Azerbaijan, LUKoil has already invested over $0/5 billion in the republic.
Baku-Tbilisi-Ceyhan: everything conforms to the plan
The Baku-Tbilisi-Ceyhan Major export Pipeline will be put for exploitation in 2005. It was stated by a representative of the Turkish Ministry of Energy and Natural Resources.
According to him, “everything corresponds to the plan and there is no ground to suppose that the date for exploiting the pipeline that is of importance not only in the regional context, but also for world oil supplies, will be postponed for a later period”. The source marked that the NI Italian Concern’s recent joining to the MEP sponsor group is just a proof to the said. Already at the last July conference “History of three seas” held in Istanbul, the concern leader, Vittorio Minkato, expressed hope to join the project. A month later, he confirmed this intention and the concern commenced negotiation process with the State Oil Company of Azerbaijan. The negotiations have completed with a successful result: ENI purchased 5% equity in the project at the expense of SOCAR’s share that is 45%.
Answering the question whether the present situation all over the world affects realization of the MEP, the representative of the Turkish Ministry of Energy and Natural resources said that he didn’t find any grounds to worry about. “It is better to believe ENI that has decided to join the project”.
Azerbaijan has a threat of the lack of cash manats
The National bank of Azerbaijan informed that by the end of 2001, Azerbaijan can face a lack of cash manats.
This crisis can appear because of the delay of the committee on money circulation with order of publication of new consignments of banknotes in return for worn out banknotes. "The demand for cash continues on raising from September, but the inpayments of new consignments of banknotes can't be expected earlier than year 2002. Thereupon, the deputy chairman of NBA, Abdullah Melik-Aslanov makes negotiations with the suppliers of banknotes, Thomas De La Rue Company on acceleration the realization of the contract on publication of banknotes", - said the representative of NBA. Intensification of the problems of money circulation happened consequently to the fact that in September 2001, first time in last years the money emission for 28.4 billion AzM or 0.47% of release of money reserves to circulation. In September the NBA released to circulation 6087.6 billion AzM, 6059.2 billion came to the cash desk of the bank. In August 2001 negative emission amounted to 64.5 billion AzM or 1.25 from the amount of release of monetary reserves to circulation, in June - 41.4 billion and by the results of the first half-year - 97.1 billion AzM. The reason of appearance of positive money emission became the decrease of the exchange course and deceleration of deflationary processes in September 2001 in Azerbaijan.
External debt on IGP amounts to 22,5%
Ratio of external debt of Azerbaijan and internal gross products (IGP) amounts to 22,5%.
The Ministry of Finances informed this to "Fininvest" and noted that international practice shows acceptable level of external debt. The problems can appear in case of exceeding of 40% index. Totally only the amount of used credits, provided by the governmental guarantee, the total amount of which was $1138 million by the end of the year, is considered an external debt. While this 33% of assimilated resources were directed to realization of structural reforms, to the reconstruction of electric energy sector - 29%, to the improvement of transport sphere - 12%, to the development of agriculture and irrigation - 11%, to the modernization of chemical industry - 4% and to other spheres - 11%.
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