The specialized platform oilprice.com reports that BP starts drilling two new exploration wells in the Caspian Sea on the territory of Azerbaijan in search of gas fields at deep horizons.

The announcement was made owing to the fact that Azerbaijan imports gas from Iran (under a swap scheme involving Turkmenistan) and Russia to meet both growing domestic demand and existing export contracts. Baku has also pledged to double exports to Europe within five years, and BP's exploration wells will play a key role in obtaining new volumes of gas.

One of the wells will be drilled to a depth of 7,000 meters, as BP reported this month, to develop a gas reservoir that is believed to be located under the existing Shah Deniz gas field, currently providing most of Azerbaijan's gas exports. This well, the construction of which is expected to take about a year, should confirm the possibility of commercial gas production from a deep reservoir.

According to BP representatives, the second well, the depth of which will reach about 4,500 meters, is aimed at a possible reservoir under the Azeri-Chirag-Guneshli (ACG) field. This drilling project will follow the existing well for part of the depth and is therefore expected to be completed in three months.

Deep sea drilling is extremely expensive, with each well costing several tens of millions of dollars. The first well is being drilled under the current production agreement between Baku and the consortium operating the field, which includes BP, the Azerbaijani state oil company SOCAR, the Turkish state oil company TPAO, the Iranian state oil company NICO and the Russian oil company Lukoil. This means that any gas extracted from the deep field belongs to the consortium, and that the consortium can reimburse the cost of the well from the income received from the sale of gas from the field.

The situation with the ACG probe is more complicated. Like most oil fields, ACG also produces large amounts of gas; some is pumped back into the reservoir to stimulate oil production, while the rest is brought ashore via pipelines.

According to the production agreement, the oil extracted from the field belongs to the ACG consortium, which includes BP, SOCAR, TPAO, Exxon Mobil and six other international companies that together export oil to world markets. However, the gas that is delivered by land belongs to SOCAR and is used to meet the domestic needs of Azerbaijan.

If industrial volumes of gas are discovered at one or both of the exploration wells, it will not be difficult to find markets for this gas. In recent months, when Azerbaijani gas has already entered Greece and Bulgaria, the countries of South-Eastern Europe have expressed interest in importing gas from Azerbaijan.

In July, Brussels and Baku signed a historic agreement under which Baku will increase gas supplies to Europe from 10 bcm to 12 bcm in 2022 and double the amount to 20 bcm by 2027.

At the end of 2021, Azerbaijan signed a trilateral exchange agreement under which Turkmenistan supplies gas to northeast Iran, and the corresponding volume is supplied from northwest Iran to Azerbaijan.

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