AZERBAIJAN - The Alov JV.

With the PSA signed in mid-1998, the 1,400 sq km and BP-operated offshore Alov block is the largest granted in the Azeri sector of the Caspian, about 180 km south of Baku. It contains the Alov, Araz and Sharg structures believed to have 4 bn barrels of oil between 2,500-6,500 metres below the seabed. Investment would be up to $10 bn. BP in 1999 did a 3D seismic survey and said up to five more wells were to be drilled by 2004.

However, the block is also being claimed by Iran which calls that area Alborz. On July 23, 2001, an Iranian navy gunboat forced two BP-operated survey vessels in the area to return to port (see background in DT) BP then decided to suspend work on this block until Baku and Tehran resolved the dispute.

A 2D seismic survey of Alborz had been carried out by a consortium of Shell, Lasmo (now part of ENI) and the Iranian state-owned Khazar Exploration and Production Co. Kepco is a unit of NIOC. After the survey Tehran said its part of the Caspian, including Alborz, contained about 10 bn barrels of oil and 560 BCM of gas. Later Shell was said to have declined to participate in developing Alborz.

The Alov JV is led by BP (15%). Its partners are Statoil (15%), ExxonMobil (15%), TPAO (10%), Alberta Energy (5%) and Socar (40%).