TURKEY: Baku confirms Caspian concession share increase

24 March 1995

Azerbaijan has agreed to a proposal for state Turkish Petroleum Corporation (TPAO) to increase its share in a large offshore oil concession in the Caspian Sea to 6.75 per cent, Azeri President Haydar Aliev said on 13 March. TPAO has been negotiating with its Azeri counterpart Socar to buy 5 per cent of the latter's 20 per cent stake in the concession.

Aliev also said the Western-led consortium holding the concession had agreed to the share increase. The crude oil from the Azeri, Cirali and Gunesli fields in the concession would also definitely be exported in a pipeline via Turkey, he added.

He made his announcement after meeting President Suleyman Demirel in Copenhagen during the week-long UN Summit for Social Development ending 12 March. Aliev said he had acceded to persistent requests from Demirel and Prime Minister Tansu Ciller. However, he also said Baku had asked Ankara not to cancel its blockade on the transit of goods through or over Turkish territory to Armenia, imposed three years ago because of the Azeri- Armenian conflict over Nagorno-Karabakh.

Ankara has lobbied hard against Russian opposition for an estimated $3,000 million- 4,000 million pipeline from Azerbaijan to cross its territory to Ceyhan in the Iskenderun Gulf in the eastern Mediterranean. Ankara has also offered to purchase the initial output from the concession.

A meeting of the consortium in London on 9 March reportedly agreed to transport the concession's initial output through Georgia, but decided to resume discussions on export pipeline options in mid-April. Recent reports have indicated the initial output would be railed or trucked through Georgia to its Black Sea port of Batumi. The Georgian government has also pressed for the rehabilitation of an existing but old pipeline running from Baku to Batumi.

Led by an alliance between British Petroleum (BP) and Norway's Statoil, the consortium secured the 30-year concession last September. Besides TPAO, it also includes the US' Amoco, McDermott International, Pennzoil and Unocal, the UK's Ramco Energy, Saudi Arabia's Delta-Nimir, and Russia's Lukoil.

Output from the concession could begin within 18 months. Production is expected to reach 80,000 barrels a day (b/d) by 1997 and thereafter rise to an eventual peak of 700,000 b/d. The fields in the concession are estimated to have reserves of 3,800 million barrels. Current Azeri production is around 160,000 b/d.

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