ExxonMobil to quit Azeri project due to lack of oil

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Wednesday June 5, 5:14 am Eastern Time

 

Reuters Company News

ExxonMobil to quit Azeri project due to lack of oil

 

BAKU, June 5 (Reuters) - International oil major ExxonMobil said on

Wednesday it planned to close one of its offshore oil projects in

Azerbaijan next year because it had failed to find enough oil.

 

The ExxonMobil move follows a number of recent failures by rivals such

as TotalFinaElf (Paris:TOTF.PA - News) or Agip to discover oil in the

Azeri sector of the Caspian Sea, which some experts say contains less

oil than officially estimated.

 

A spokeswoman for ExxonMobil in Azerbaijan said the firm would abandon

in 2003 its production sharing agreement with the Azeri state oil firm

SOCAR over the Oguz oil block, after an exploration well drilled in

2001 failed to discover big volumes of oil or gas.

 

"The exploration period on Oguz expires in 2003 and we do not intend

to extend this contract after we failed to discover commercially

viable reserves," Nikki Kazimova told Reuters.

 

She said ExxonMobil was due to drill one well on Oguz under the

agreement with SOCAR and did not intend to drill a second well despite

SOCAR's proposal to extend the exploration period.

 

"We will wait until the agreement expires to officially close the

project," she said. However, Kazimova said ExxonMobil was still

committed to other projects in Azerbaijan as the firm participates in

five different production sharing agreements.

 

"ExxonMobil have already invested more than $1 billion in Azerbaijan,

which shows that this is a strategic region for us," she said.

 

Azerbaijan has signed 21 production sharing agreements worth $60

billion with international oil firms over the past decade. The failure

of Oguz reduces the number of projects still in place to 15. They are

worth some $48 billion.

 

Only one offshore project in Azerbaijan is producing oil so far, from

Azeri-Chirag-Guneshli oil fields developped by an international

consortium led by BP (London:BP.L - News). Oguz was one of the closest

blocks to this area.