SOCAR TO FINANCE ITS SHARE IN SHAH DENIZ PROJECT ALSO AT EXPENSE OF PROFIT OIL PRODUCED FROM CHIRAG FIELD

BAKU/30.11.04/TURAN: The financing scheme of SOCAR's 10% share in the Stage-1 project (early production from gas condensate field Shah Deniz - $ 230 million) and construction of the South Caucasian pipeline (SCP - $90 million) of $320 million.

SOCAR president Natig Aliyev said to journalists that an agreement with the EBRD on awarding a $170 million credit to the State Oil Company of Azerbaijan within the Shah Deniz project, was going to be signed in December. SOCAR will provide $150 million itself.

"We have opened a special account to accumulate revenues from sale of SOCAR's profit oil within the development of Azeri-Chirag-Guneshli fields. $41 million of funds are expected to enter the account in 2004. However, the forecasts might even be exceeded by the current oil prices. We will use these funds for covering our share in the Shah Deniz project", explained Aliyev.

It should be noted that SOCAR will use $60 million from the EBRD's upcoming credit for construction of export gas pipeline Baku-Tbilisi-Erzurum, and $110 million - for the Stage-1 project. It should be reminded that the State Oil Company already invested some $40 million from its special funds for financing its share in the Shah Deniz project, last year.--0--

EXPENSES ON CONSTRUCTION OF BTC WILL REACH З $4 BILLION

BAKU/26.11.04/TURAN: The value of the project of construction of the oil pipeline Baku-Tbilisi-Ceyhan (BTC) will reach $4 billion, told at today's press conference held in the headquarters of "Yeni Azerbaijan" the president of SOCAR Natig Aliyev.

"However, it is only common forecast on the value of the project, and the real sum to be spent actually will be known only after full completion of the project", he said. At the same time, Aliyev noted that according to estimation in the whole rise of prices on the project will total $300-350 million with consideration of own means of shareholders of the project and reserve at $200 million provided in the common volume of credit means. According to Aliyev, this figure takes into account the factor of the rise of prices in the world markets as in 2005 approximately 10 million barrels of oil will be required for filling in the pipeline.

Concerning the works fulfilled within the frameworks of the project N.Aliyev told that for November 14 the welding works along the whole pipeline were fulfilled by 99,4%. There remained to bed into ground 37km of the pipeline in Azerbaijan, 38 km in Georgia and 905 km were bed in Turkey. It is expected that the Azeri part of BTC will be ready to putting into exploitation in the end of January 2005, the Georgian- in March and the Turkish in the end of March. Aliyev told that top level meeting for discussing of the course of construction on the Turkish part of the BTC and lifting of possible problems will take place in Turkey in the near future. --09C--

SHARE OF SOCAR IN FORMATION OF INCOME OF THE STATE BUDGET 2005 WILL MAKE 38,4%.

BAKU/26.11.04/TURAN: The share of SOCAR in formation of income of the state budget of 2005 year will total 38,4%, told at the press-conference the president of SOCAR Natig Aliyev. According to him, depending on the prices for oil in the world markets the tax deductions of SOCAR to the state budget next year will total 3 trillion manats at the price $25 and up to 4 trillion manats if the price for oil is $37,5 per barrel.

He noted also that on the results of this year income of SOCAR from selling of crude oil and oil products in the domestic and world markets is expected on the level 10 trillion manats. On the results of January-October 2004 the indices totaled 8211 billion manats, and till the end of this year it will increase approximately by 1,6 trillion manats.

According to Aliyev, as the volumes of oil and gas production of SOCAR will not change in 2005 as compared with the same period of this year, approximately the same profit SOCAR may receive next year under the condition that the price for oil in the world markets will remain on the present level.

The head of SOCAR told that over 10 months of 2004 the main expenses of the company (1 trillion manats) comprise natural gas imported into the country. Over that period the company transferred to the state budget 1567 billion manats. The debts of SOCAR till the end of the year will total approximately 1 trillion manats. --

TRANSPARENCY INITIATIVE FOR EXTRACTING INDUSTRY TO BE IMPLEMENTED IN AZERBAIJAN

BAKU/24.11.04/TURAN: The memorandum on mutual understanding on the implementation of the Mineral Resource Extraction Transparency Initiative (MRETI) was signed on 24 November. The MRETI Commission, over 20 local and foreign oil companies and the representative of the Coalition of 32 NGO for transparency in the extraction of minerals signed it. Samir Sharifov, Chief of the State Oil Fund of Azerbaijan, Chairman of the MRETI Commission, and Sabit Bagirov, Chairman of the Enterprise and Market Economy Development Fund, signed the memorandum on behalf of the Commission and the Coalition respectively.

Mr. Samir Sharifov said the Azerbaijan government supported the transparency initiative announced by Mr. Tony Blair, British Prime Minister, in September 2002, and joined this initiative soon, in June 2003. The transparency means reports of the oil companies on payments to the government and reports of the government on incomes from the oil companies. The summary of the data produces the index of transparency here.

The memorandum envisages the following things:

- The MRETI Commission reports are published 2 times a year: 6-month reports are published by 15 August, and annual reports are published by 15 April;

- A reliable international audit company is invited. A group of 6 people selects it, with each of the parties represented by 2 people. The government and the oil companies will pay for the audit in turn;

- The MRETI Commission asks the companies and the government to submit their reports to the auditor;

- The audit company works out a summarized report on the data of the government and the extracting companies;

- The auditor sends the final report to the participants in the initiative and makes it known to the public.

Mr. Sharifov also said the memorandum was a primary agreement so it could be amended in future.

The parties of the treaty, the UK Ambassador to Azerbaijan, the leaders of the local offices of the World Bank, the International Monetary Fund and the European Bank for Reconstruction and Development, i.e. Messrs Laurence Bristow, Ahmed Jahani, Basil Zavoiko and Raymond Conway, positively appreciated Azerbaijan's developing of this international initiative. They hope that will develop transparency in the extracting industry further. Mr. Laurence Bristow said the Azerbaijan MRETI Commission report expected in the coming months would be the first experience of that kind in the world. Mr. Raymond Conway said Azerbaijan's initiative would be highly appreciated at the international conference on investment in Azerbaijan, which would be held in London on 14 December.

INCREASE IN COST OF THE PROJECT OF THE CONSTRUCTION OF THE PIPELINE BAKU - TBILISI - CEYHAN HAS BEEN CAUSED GROUNDLESS CLAIMS OF NGO

BAKU.24.11.2004. MEDIA-PRESS: Increase in cost of the construction of the MEP BTC first of all has been caused by delays appeared for groundless pretensions of NGO to safety of BTC. The President of the SOCAR Mr. Natiq Aliev has said this to journalists.

By his words, every day of the construction of BTC costs $2 MM. "And a lot of time has been spent for hearing of NGO. Special report of 1 thou pages for banks-creditors have been prepared. Additional consultants were to be hired; even court trials have been taken place. Thus, cost of just work on removal of groundless pretensions has appeared very high. Moreover, in separate regions strikes have been occurred and different demands have been put forward and this totally resulted in delay of the construction by 15 days" - Mr. N. Aliev has noted.

At the same time he has noted that increase in cost is observed in all three countries - Turkey, Azerbaijan and Georgia. Tendency of growth in prices is one of causes of this. So a cost of labor, electric power and fuel has increased.

Mr. Natiq Aliev has noted that there is agreement on construction of BTC between Azerbaijan and Turkey. "Turkish piece, as it is known has been estimated by a total of $2.4 bn. The Treasury of Turkey has taken liability that if this total is exceeded, Turkey will be ready to redeem about 250 MM. Moreover, if the construction is not completed in term, BOTAS (the contractor of the Turkish piece) will pay out $500 thou for each day of delay to BTC. However we do not want discussing these problems for the project", - Mr. N. Aliev has declared.

To date the construction of the pipeline is on the last stage. 99% of the works have been executed. In Azerbaijan construction works have been completed actually.

3 km of pipeline have remained on the territory of Georgia for welding. In Turkey the works are going in good rates and by confirmation of the Turkish side they are to be completed fully on March of 2005.

However, by the words of Aliev, in Turkey works on the pumping-compression station of BTC will be fully completed by the end of the construction of the pipeline so temporary chart is prepared, in accordance with which pumps and compressors will be installed for reception of the first oil and then works on the stations will be continued. By opinion of the President of the SOCAR, the first tanker with the Azerbaijan oil will go out from the terminal Ceyhan on June of 2005.

BP (30,1%), the SOCAR (25%), Unocal (8,9%), Statoil (8,71%), TPAO (6,53%), ENI (5%), Itochu (3,4%), ConocoPhillips (2,5%), Inpex (2,5%), Total (5%) and Amerada Hess (2,36%) are the shareholders of the project BTC.

EXXONMOBIL WILL DELIVER ITS SHARE OF OIL FROM THE ACG BY RAILWAY

BAKU.24.11.2004. MEDIA-PRESS: The American ExxonMobil has concluded the agreement with the company AzPetrol on transportation of its share of oil from the fields "Azeri-Chiraq-Guneshli" via the railway (through the territory of Azerbaijan and Georgia to the Black Sea port Batumi). The President of the State Oil Company of Azerbaijan (SOCAR) Mr. Natiq Aliev has said.

By his words, ExxonMobil has not got any results on negotiations with BTC Co. (the operator of BTC) and it has become a cause of such decision.

Moreover, Mr. Natiq Aliev, the negotiations with ExxonMobil continue. "I privately support that ExxonMobil joins BTC Co,", - he has said.

Supposedly, average tariff on oil pumping by the pipeine BTC will make $3.3 - $3.5 per a bbl. However these tariffs will be actual for only companies, which have taken part into the construction of the pipeline and entered into BTC Co. For companies, which will want to transport their oil by BTC further, higher tariffs will be installed.

THE EXPLORATION WELL ON THE FIELD "ZAFAR-MASHAL" HAS APPEARED THE MOST EXPENSIVE IN THE CASPIAN SEA

BAKU.24.11.2004. MEDIA-PRESS: "The cost of exploration well, drilled by the American company ExxonMobil on the field "Zafar-Mashal" in the Azerbaijan sector of the Caspian Sea has made about $150 Mm. This is the most expensive well in the Caspian Sea. By confirmation of experts of the company, the well has appeared empty. So I think that scarcely ExxonMobil will drill the second well on this field", - the President of the SOCAR Mr. Natiq Aliev has said. So he has noted that the company ExxonMobil has executed all liabilities on this well and drilled it up to 7080 m at the project depth of 7000 m.

We shall remind that earlier ExxonMobil decided to remove the first exploration well on the field "Zafar-Mashal{. Then officials of the company have declared that the company has not revealed commercial hydrocarbon supplies and so it was shut down.

Contract of the PSA type on development of the perspective structure "Zafar-Mashal" was signed on the 27th April of 1999 and ratified by the Parliament of Azerbaijan on 8th May of 2000.

The following companies are shareholders of the project: the SOCAR - 50%, ExxonMobil - 30% (the operator of the project), ConocoPhillips - 20%. Forecasted oil supplies on the structure make 140 mm tons by estimates and volume of investments required for development make $5 bn.

The structure "Zafar-Mashal" is situated in 130 km to southeast from Baku; its square makes 640 sq.km. and sea depth makes 450 - 950 meters.

BY THE OPINION OF THE PRESIDENT OF THE SOCAR, EXXONMOBIL WILL DRILL THE SECOND EXPLORATION WELL ON THE OFFHSORE BLOCK "NAKHCHIVAN"

BAKU.24.11.2004. MEDIA-PRESS: "The company ExxonMobil again interprets data on sructure "Nakhchivan". "Most likely our consultations will result in drilling else one well there", - the President of the SOCAR Mr. Natiq Aliev has said.

By the words of the President of the SOCAR, the structure of "Nakhchivan" is considered perspective. Though experts of ExxonMobil and confirm that if the second well on "Nakhcivan" even appear saturated by oil and gas, it will present interest. "Principally, I do not think so, because by all parameters and rates, which we have and accounting cost of oil in the world I think that any field presents commercial interest", - Mr. N. Aliev has noted.

By his words, agreement with ExxonMobil has been constructed in such way that "we loose nothing". "If the company does not anything we do not receive information about well, but receive money. However, we cannot drill the well, receive information, we shall loose money, which should be paid out to us. So the agreement, signed by us defends the owner of natural resources", - the President of the SOCAR has said.

We shall remind that the first exploration well on the block "Nakhchivan" was drilled else in 2002. Sinking was stopped at a depth of 6700 m for too small oil flow. Experts of the SOCAR have insisted since long time ago that the project depth of the well is to be increased by else 500 m. By their opinion, hydrocarbons on this are lay lower than experts of ExxonMobil have supposed.

Block "Nakhchivan is situated in 85 km to south from Baku. The contract area makes 280 sq. km and depth of water makes 800 meters in some places. The SOCAR and ExxonMobil share by 50% of shares. Investments in development of the field are evaluated by $2 bn. Forecasted supplies - 110 MM tons of oil and 85 bn cubic meters of gas.

THE GEORGIAN PREMIER AND PRESS SERVICE OF BP-AZERBAIJAN DISPROVE CONFIRMATIONS ON POSSIBLE FREEZING OF CONSTRUCTION OF OIL PIPELINE BAKU - TBILISI - CEYHAN

BAKU.19.11.2004. MEDIA-PRESS: The construction of the export oil pipeline BTC may be stopped for undetermined period, the British "Sunday Times" has informed; it confirms that the Parliament of the Great Britain starts investigation of activities of the company BP in Turkey and Azerbaijan.

We shall remind that BP carries out construction of export oil pipeline, which is to be put into operation in the spring of 2005. The project has been estimated by a total higher than $3 bn.

As "Sunday Times" confirms, the British Parliament has been interested in real degree of safety of the pipeline, for which additional $60 MM have been allocated. By version of he newspaper, the investigation as minimum may to bring to stopping the construction. By its predictions, according to investigation serious penalty provisions may be applied to BP not saying about reporting of it to the companies-contractors and creditors including the World Bank and the European Reconstruction and Development Bank.

The construction of the oil pipeline has been completed really on the territory of Azerbaijan and it is completed on the territory of Georgia and will prolong up to spring in Turkey. As the agency Rosbalt reminds, the construction of the oil pipeline in Georgia is conducted in conditions of permanent protest actions of people. To date citizens of the region Samtskhe-Javakheti hold meetings in the south of the country and they confirm that BP has let down them and not paid or paid not completely out them for agricultural plots, which as if were purchased from the farmers for construction of oil pipeline. Residents of the region threaten by taking radical measures that is not allowing completion of construction of oil pipeline on the territory of Georgia.

As it has been cleared up, other British newspaper "The Guardian" has published analogous confirmation. By its information, the American company "The World Parlson", which examined the pipeline BTC has found out 1thou 265 defects in the Georgian segment of the pipeline. By information of the newspaper, the analogous situation is observed also in the Azerbaijan segment.

The Premier Minister of Georgia Mr. Zurab Jvania has responded to these statements one of the first. "There are not any grounds for stopping the construction of the pipeline BTC", he has declared to the journalists commenting confirmation of "The Guardian".

In her turn the Chief of press service of the company BP-Azerbaijan Mrs. Tamam Bayatli has declared to the agency Media-Press "the pipeline BTC is one of the mostly checked up projects in the world".

"The international finance structures, which allocated credits to its construction, will hire the international consultants, which will constantly conduct researches on safety of its operation".

Moreover, she has emphasized, BTC Co (the Pipeline company Baku - Tbilisi - Ceyhan) is sure in high quality of both done works and further technical service of the pipeline. For prevention to corrosion even cathode protection has been installed on it. In operation process so called "intellectual pig" will check its impermeability.

By the words of the chief of press service of BP-Azerbaijan, the company BTC Co. knows about all errors as if committed during the construction, about which officials of nongovernmental and ecological organization have talked and mass media have written. However up to date any similar confirmation have not been proved. Mrs. T. Bayatli has emphasized that the construction of the pipeline is continued in accordance with schedule and on total length of the route from Baku up to Ceyhan 99% of pipes have been welded.

EXPENSES OF BAKU-TBILISI-CEYHAN PIPELINE CONSTRUCTION TO EXCEED BUDGET, NATIG ALIYEV

BAKU/15.11.04/TURAN: "The exрenses of the Baku-Tbilisi-Ceyhan (BTC) oil рiрeline construction will exceed the budget," Natig Aliyev, President of the State Oil Comрany of Azerbaijan (SOCAR), told the mass media. He said over $3 billion had been sрent on the рroject already.

"The рroject will exceed the budget, because the construction work has been delayed in Georgia and Turkey," he stated. Several kinds of work, including organization in рarticular, were not done in Turkey on time. "The Turkish рart is rather difficult, so they had to рrovide the materials, devices and gear and count the labor force, etc. in advance. But that was done too late, as the funding of the рroject had not been aррroved on time due to the actions of рeoрle disрleased with the construction," the SOCAR President noted. He said those рeoрle were still trying to violate the рroject.

He said the рroject could get 5 or 7% dearer because of the actions of the oррonents, and not because of the customers or the contractors. "They do all to violate the work. It naturally makes the рroject dearer. The contractors and customers are not guilty here," he asserted.

Mr. Natig Aliyev said the construction was going to finish, with 98% of the work already done. The work in Azerbaijan has almost finished, exceрt several рassages crossing railways and the Kura. Some work is to be done at рumрing and comрressing stations, which are to be tested. In Georgia they still have to weld 3 km of the рiрeline. In Turkey the work is done on time and the Turkish side рromises to finish it in March 2005. But the рumр and comрressor station work will not have finished in Turkey by the time the рiрeline is fully constructed, so they are working out a temрorary schedule. According to it, рumрs and comрressors for the first shiрment of oil will be installed, while the work is continued. The first tanker with Azerbaijan's oil will leave the рort of Ceyhan, Turkey in June 2005.

Mr. Natig Aliyev also reрorted that the BTC Steering Committee would hold a meeting in London on 15-16 December. They would summarize the achievements of 2004 and confirm the action рlan and the budget for 2005.

* The BTC construction is to total $2.95 billion. The whole рroject is to total $3.6 billion, including the interests on the loans and the рiрeline filling exрenses. The following comрanies take рart in the рroject: BP (30.1%), SOCAR (25.00%), Unocal (8.90%), Statoil (8.71%), TPAO (6.53%), ENI (5.00%), Itochu (3.40%), ConocoPhiliрs (2.50%), INPEX (2.50%), Total (5.00%) and Amerada Hess (2.36%). The length is 1,767 kilometers, including 443 in Azerbaijan, 248 in Georgia and 1,076 in Turkey. The caрacity is 50 million tons of oil a year. The construction commenced in Aрril 2003 and is to finish in the first quarter of 2005. The exрort of Azerbaijan's oil from Ceyhan is to start in the middle of 2005. --0--

SALANS COMPANY FROM UK TO ADVISE RESTRUCTURING OF STATE OIL COMPANY

BAKU/15.11.04/TURAN: Salans Comрany from the UK has begun to work out advice on the restructuring of the State Oil Comрany of Azerbaijan (SOCAR). The Euroрean Bank for Reconstruction and Develoрment (EBRD) has granted $1 million for that.

Natig Aliyev, SOCAR President, told the mass media the suggestions would be worked out by the end of 2005. "After Salans gives the advice, we will have to consider it with them in 6 months. Then we shall come to an agreement and submit the mutually aррroved ideas to the government," he stated.

Mr. Aliyev said the restructuring of the SOCAR was mainly aimed at seрarating the state functions from the commercial ones. He said no enterрrises of double function should remain at the comрany. Enterрrises able to work indeрendently and рrovide service both in oil industry and other sрheres should not remain at the SOCAR either.

Mr. Aliyev also reрorted that the SOCAR leaders intended to simрlify the structure of the comрany considerably and to make the business relations within the SOCAR transрarent. That is why several enterрrises of the SOCAR will follow the estimate of costs confirmed by the SOCAR management from 2005 onwards. However, the SOCAR leader refused to reрort the names of those enterрrises.

EBRD AND SOCAR INITIALLY APPROVE OF LOAN ON STAGE 1 OF SHAH DENIZ PROJECT

BAKU/04.11.04/TURAN: The European Bank for Reconstruction and Development (EBRD) and the State Oil Company of Azerbaijan (SOCAR) have initially approved of the credit of $170 million, which will be paid as the SOCAR share on Stage 1 of the Shah Deniz gas field exploitation project. The gas field is located in the Azerbaijan part of the Caspian Sea.

Natig Aliyev, President of SOCAR, told the mass media the agreement was achieved in Baku on 4 November. The final document is to be signed in London in December.

They plan to spend $110 million of the loan on the SOCAR share in the project and $60 million on the construction of the South Caucasus Gas Pipeline from Baku to the border of Turkey via Tbilisi. The gas will be exported from Shah Deniz to Turkey.

Mr. Natig Aliyev did not clarify the conditions of the loan. But he said EBRD could allocate more money if it appeared to be necessary. "We have asked for $170 million, but the bank can allocate more," he stated.

* The Shah Deniz contract was signed in Baku on 4 June 1996. The Parliament ratified it on 17 October 1996. The participants in the project look as follows: BP (Operator - 25.5%), Statoil (25.5%), SOCAR (10%), LUKAgip (10%), NICO (10%), TotalFinaElf (10%) and TPAO (9%).

* Stage 1 of Shah Deniz envisages the extraction of 178 billion cubic meters of natural gas and 34 million tons of condensed gas. It also includes the construction of the South Caucasus gas pipeline being 690 km long, with 442 km being in Azerbaijan and 248 km being in Georgia. The Stage 1 project totals $3.2 billion, with $2.3 billion being the exploration and gas extraction costs and $0.9 billion being the gas pipeline construction costs. The payment of the SOCAR share of 10% requires $320 million. EBRD is to give $170 million of that amount, while SOCAR itself will give the rest.

* The resource of Shah Deniz is believed to total 625 billion cubic meters of natural gas and 101 million tons of condensed gas.

THE SOCAR AND THE CASPIAN ENERGY HAVE CONCLUDED THE PRODUCTION SHARING AGREEMENT ON THE FIELD "KYUROVDAG"

BAKU.05.11.2004. MEDIA-PRESS: The State Oil Company of Azerbaijan (SOCAR) and the British Caspian Energy Group have concluded the PSA on oil onshore field "Kurovdag".

Since 1997 the joint company Shirvanoil founded by the SOCAR (51%) and Caspian Energy Group (49%) has developed this field. However the form of the joint company does not satisfy both the sides and in connection with this a decision on transferring to the work within frameworks of the PSA have been taken.

By results of three quarters of the current year on the field "Kurovdag" 192 thou tons of oil were produced and this is by 14 thou tons less than for the analogous period of the past year. Gas production has made 9.8 MM cubic meters or by 1.2 MM cubic meters less than in 2003.

The field "Kyurovdag", one of the largest onshore fields of Azerbaijan was opened in 1955 and its development began since 1956. To date it includes 13 productive horizons within depth range from 600 to 3500 meters.

Last correction date of the file: 24/7/2008 - 15:22:32