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Geological Study May Reveal That Azeri Sector Can Offer As Much Gas As Oil

Maritime Activity Reports, Inc.

September 20, 1999

Closer geological study of the Azeri sector of the Caspian could reveal a greater tendency towards gas than oil in the sea's deep-water section, the chief geologist of Azeri state oil company SOCAR said. If true, the speculations of Khoshbakht Yusifzade, who is the country's leading expert and one of four SOCAR vice presidents, could confirm growing suspicions that Azerbaijan holds as much gas as oil, if not more. Azeri specialists have now studied almost all of the former Soviet republic's onshore and shallow-water offshore structures and have discovered that is where the bulk of the oil lies, Yusifzade said. "Our previous research and experience in Azerbaijan allows us to assume that in the Caspian, the deeper the water, the more likely it is that we'll discover gas seams," he said. Recent results from the first test well at the offshore Shakh Deniz field, which indicated natural gas reserves of up to 700 bcm, confirm this theory, he said. "Even 10 years ago we predicted there was more chance of finding gas than oil in Shakh Deniz, which is in water depths of 100 to 500 meters." However, this may not be what many foreign oil companies operating in the Caspian state want to hear. "I'm an oil man and I know nothing about gas, but now it seems I'll have to move fast and learn all about gas as there's probably quite a lot of it here," said one industry source after the announcement of the Shakh Deniz results. Since 1994 the world's oil majors have been busy grabbing offshore acreage in Azerbaijan and have signed 19 contracts hoping to find viable deposits of crude, which can be exported by pipeline, rail and tanker. Unlike oil, gas exploitation requires supply contracts and significant investments in infrastructure before extraction can even begin. According to Yusifzade there is a strong possibility that other deep-water structures, such as Exxon's neighboring Zafar-Mashal field and Chevron's Absheron field will also prove to be mainly gas deposits. "It's hard to say definitely before we get some exploratory drilling results, but in all likelihood Absheron and Zafar-Mashal could contain more gas than oil," Yusifzade said, but added they would also contain unpredictable quantities of oil. He estimated Azerbaijan's gas reserves at 3.0 to 3.5 trillion cubic meters (2.7 to 3.2 billion tons of oil equivalent), out of a total 6.0 to 10 billion tons of hydrocarbons.

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