Zenith Energy has taken over operatorship of Azerbaijan’s largest onshore producing oilfield.
The firm, via its wholly owned subsidiary of Zenith Aran Oil, owns 80% participating interest in the three fields within the contract area – Muradkhanli, Jafarli and Zardab.
Zenith confirmed a Rehabilitation, Exploration, Development and Production Sharing Agreement with SOCAR for the assets. SOCAR owns the remaining 20%.
The duration of the REDPSA is 25 years, with a potential extension of five additional years.
Zennith has since awarded a well cover contract to a “highly experiences local drilling company”.
Production form the fields is 295bopd.
Chief executive Andrea Cattaneo said: “We are pleased to announce the beginning of our workover programme so soon after Zenith’s successful admission to the London Stock Exchange’s Main Market. With the current price of Urals oil exceeding $51 per barrel, significantly higher than the price of oil when Zenith first assumed operatorship of these fields, the timing could not be more favourable for the company to expedite its strategy to increase production.
“Our fields, Muradkhanli, Jafarli and Zardab, have previously produced in excess of 9,000bopd with peak production even reaching 15,000bopd during the Soviet Union period. However, shortly after achieving these peaks, production significantly declined due to a series of mechanical failures; and progressively declined because of a lack of investment in the fields. This lack of material attention towards the fields can be explained by Azerbaijan’s post-independence national energy strategy focused on offshore oil production.
“The company believes that this lack of maintenance and gradual dilapidation of field equipment is the principal cause of the decline in oil production and that these fields are far from reaching a stage of natural depletion. This has been confirmed by the recent Competent Persons Report (CPR) that assessed 2P reserves of 33.4 million barrels of oil net to Zenith.
“We look forward to providing Zenith investors with regular updates regarding the progress of our development and rehabilitation activities in Azerbaijan.”
