The LUKoil today started sinking a maiden prospecting hole with the "Geidar Aliev" semi-submersible floating drilling rig. The works base in the vicinity of the Yalama extrapolated oilfield, in the north of Azerbaijan's Caspian sector. D-222 structural studies to infer its petroleum and gas reserves have shown the field to go far outside the limits of the territory from whose tentative area and coordinates the available LUKoil-GNKAR contract proceeded.
In compliance with the contract, the Russian mammoth suggested to its Azeri partner to enlarge the contract area from present-day 1,287 square kilometres to 3,037. The LUKoil is also anxious to increase its project share.
The partners met at the negotiation table in Baku to agree on transaction terms for the GNKAR to partly cede its share. They signed a package on additional terms of D-222 prospecting and opening up.
The LUKoil will pay to Azerbaijan forty million US dollars as soon as D-222 prospecting is over-no matter whether oil and gas are found or not. Total payments for D-222 opening up will amount to $156 million, Natik Aliev, GNKAR president, said to the Baku-based ANS television in a live cast the day the supplementary package was signed.
The D-222 prospecting, opening up and production sharing contract was signed in Moscow, July 1997, while Geidar Aliev, then Azeri President, was paying an official visit to Russia. The Milli Majlis, Azerbaijan's parliament, ratified the contract in December the same year.
The D-222 is part of the Yalama, the Northeast Caspian's largest extrapolated gas- and oilfield, 30 kilometres off the shore. Its Azeri and Russian parts are approximately equal. Its petroleum reserves are inferred at 800 million barrels, and gas at 50 billion cubic metres, with workable deposits very probable.
