Azernews.Az

By Nigar Abbasova

Zenith Energy Ltd., a Canadian energy company specialized in the oil and gas exploration and production, has extracted the first volume of oil within the framework a deal signed with Azerbaijan’s state oil company SOCAR on the development of on-shore blocks of Muradkhanli, Jafarli, Zardab oil fields.

The first volumes of oil in Azerbaijan hit approximately 300 barrels per day.

This milestone marks the successful completion of the handover process and the transfer of operatorship to Aran Oil Operating Company, an entity jointly created and owned by Zenith Aran Oil Company, a 100 percent subsidiary of Zenith Energy ltd (“Zenith Aran”) and SOCAR, the company reported.

In proportion to their ownership of Aran, Zenith Aran, a wholly-owned subsidiary of Zenith, will hold a 80-percent participating interest in current and any increased future production, while a SOCAR Oil affiliate company, fully owned by SOCAR, will retain 20 percent of production.

These companies were created to fulfill the Rehabilitation, Exploration, Development and Production Sharing Agreement (“REDPSA”) for the production, development and exploration of the 642.4 square kilometer onshore concession encompassing the three fields of Muradxanli, Cafarli and Zardab in Azerbaijan.

The REDPSA between Zenith Aran and SOCAR was signed on March 16, 2016. The duration of the REDPSA is 25 years, with a potential extension of five additional years.

Andrea Cattaneo, CEO of Zenith Energy said the company is confident that Azerbaijan represents an unprecedented opportunity for energy development and are committed to a long term relationship.

"We now enthusiastically embrace the opportunity to demonstrate Zenith’s strengths as an operator in one of the largest and most-storied oil and gas countries in the world and have already turned our focus to increasing the daily production of oil from the Muradxanli, Zardab and Cafarli fields,” Cattaneo said.

The Muradkhanli-Jafarli-Zardab bloc is located in the oil and gas area of the Yevlakh-Agjabedi-Imishli region of Azerbaijan.

The bloc covers a total area of 642.4 square kilometers and offer Mesozoic sediments. Moreover, a small volume of natural gas is produced at the bloc. The area is divided into rehabilitation and exploratory parts, according to the contract.

Zenith’s main focus is the acquisition of large oil acreages in countries that offer foreign investors a strong protection of their assets and hold a business atmosphere that is conducive to profitable activity.

Energy-rich Azerbaijan produces three grades of crude oil - Azeri BTC, Azeri Light, and Urals. Azerbaijan exports not only crude oil, but also petroleum products. The only producer of oil products is SOCAR, which owns Baku Oil Refinery named after Heydar Aliyev.

Some 24.7 million tons of oil and gas condensate was extracted in the country in January-July 2016. The index is 0.7 percent higher than the rate fixed in the same period of 2015. The country extracted 41.69 million tons of oil and gas condensate in 2015, as against the volume of 41.9, extracted a year earlier.

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Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova

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