Azerbaijan International

Winter 1995 (3.4)
Pages 27-29

Developments with AIOC
Pipeline Decision
The Dawn of a Bright and Prosperous Future

by Einar Bergh

Dual Pipeline Solution for Early Oil
On October 9, 1995, AIOC (Azerbaijan International Operating Company) decided to proceed with the "Early Oil" phase of the Chirag, Azeri and deep-water Gunashli Project. The decision was made by the Steering Committee which consists of representatives of all 11 partner companies in AIOC plus SOCAR (State Oil Company of Azerbaijan Republic) and the Government of Azerbaijan.

Plans call for the existing Chirag 1 platform to be outfitted with refurbished modules and for production of the oil to begin during the second half of 1996. Oil will be transported to western markets through two routes via the Black Sea: (1) a northern pipeline route through Russia to the port Novorossiysk; and (2) a southern route through Georgia to the port at Supsa. During this early phase, daily oil production is estimated to be approximately 80,000 barrels per day which will be sold at market prices.

The decision to proceed with "Early Oil" came after a thorough evaluation of technical, commercial and economic aspects of the two detailed proposals received from the governments of the Russian Federation and the Republic of Georgia. The proposals were comprehensive and protocols were signed at senior levels of both governments.

A full technical assessment of both routes was undertaken by joint teams from AIOC and SOCAR to establish the technical integrity of each route and estimate the cost required to bring each line into operation. Both pipeline options were deemed technically feasible and commercially viable. The Steering Committee approved a budget of $450 million for the remainder of 1995-96 to implement the "Early Oil" project.

Natiq Aliyev, President of SOCAR, remarked, "The decisions adopted on the Early Oil Production Project have enabled us to create certain harmony between the appraisal process on the Contract Area and its subsequent development and the export of Azerbaijan oil to the international market. The resolution of this strategic PSA (Profit Sharing Agreement) will result in its successful implementation and endow our Republic with additional economic benefits."

Terry Adams, President of AIOC, observed, "This is a major milestone in the development of AIOC. After hard work and joint cooperation with SOCAR, the first export oil will now become a reality. The first step in a giant project has been taken, which has demonstrated that Azerbaijan and the foreign oil companies can work together successfully to achieve a common and important objective. The vision of President Heydar Aliyev is rapidly being turned into reality; and the global oil industry is seeing the door open for many new investment opportunities in Azerbaijan. The management of AIOC is confident that the people of Azerbaijan are seeing the dawn of a bright and prosperous future."

Contract Activity
In June 1995, the Steering Committee approved the recommendation that the Chirag 1 Platform be refurbished to international standards so that it would be technically suitable for the production of "early oil" from the PSA contract area. SOCAR was contracted to lift Chirag 1 topsides off the platform and bring the nine modules to the SPS (Shelfprojectstroy) jacket fabrication yard for refurbishment.

This has now been done using the Titan 3 lift vessel. The derrick barge, "Azerbaijan", meanwhile, is being upgraded to handle the repositioning of the modules on Chirag 1.

The Khazardanizneft (Kaspmorneft) drilling rig is docked at the SPS yard and is being refurbished by Santa Fe. This Finnish-built semi-submersible was originally brought by barge to the Caspian Sea in three pieces and has now been operating here for five years. The "Aura", an anchor vessel, is being refurbished in Baku's Southern Bay Shipyard.

Two new pipelines will be built in order to transport gas to Neft Dashlari (Oily Rocks) and oil to a new onshore terminal south of Baku. Contracts for laying the pipelines are being evaluated and the choice of terminal site is about to be made after considering five potential sites.

Seismic Survey
The three-dimensional seismic survey over the PSA contract area carried out by the Azerbaijani-American joint venture Caspian Geophysical has now been completed using the vessel, "Baki". Data is now being evaluated.

The environmental marine field data collection for the contract area and pipeline route was carried out by Woodward-Clyde and completed during September. Results are being analyzed.

Meanwhile, the contract for the Environmental Impact Assessment has been awarded to the Norwegian firm, Det Norsek Veritas (DNV), which will work closely with Gipromorneftegas and other local specialists. DNV has now established a team in Baku.

The Environmental Subcommittee and the Monitoring and Research Working Group are now operational, with members from the State Committee on Ecology, Academy of Sciences, SOCAR, Gipromorneftegas and AIOC.

An exhibition on the environmental aspects of the project is being prepared and will be open to the public this winter in Baku.

Medical Evacuation Flights
AIOC has awarded Medical Evacuation Flights to a joint venture of Azal Airlines and Canadian Helicopters. A Sikorsky S76 machine as well as a Russian-built helicopter have both been painted the colors of the joint venture. The aircraft will be used for vessel crew changes as well as medical evacuation flights. One such flight has already showed its usefulness as an injured crew member on the seismic vessel, "Baki", was flown to shore for treatment. Exercises have been conducted, involving transfers of "patients" into and out of helicopters, then into ambulances, and on to the medical clinic in AIOC's operations camp near the SPS yard.

Villa Petrolea
AIOC has just completed their move from the Encyclopedia Building in Baku's Old Town to refurbished offices in Bayil. The building has borrowed its name, "Villa Petrolea", from the residence and park established by the Nobel Brothers in the late 19th century in "Black City" (Gara Shahar), the old oil section of Baku. The new Villa Petrolea is close to the Caspian Sea and old, abandoned drilling derricks are within view of the office windows, giving it a real sense of oil history. The building itself was constructed in the 1930s and has served at various times as a social club for retired oil workers, a school and a restaurant. It was designed in the style of Constructivism by Soviet architects reminiscent of the French architect, LeCorbusier. Visitors are usually delighted by the rather ornate and decorative features on the stairways and in the rooms.

Azeri Artists Show Paintings
Upon President Terry Adams' suggestion and in cooperation with the Azerbaijan Artist Union's President, Farhad Khalilov, the new office building (as well as the 21-room AIOC staff house) will be decorated with works from Azerbaijani artists. Every three months, artists will get a chance to exhibit their works in a revolving exhibition. Any employee, visitor or company may purchase the art. A "rental fee" will be paid to the artists through the Artists' Union. This gives Azerbaijani artists access to a new, international market and AIOC employees and contractors and guests the chance to become acquainted with Azerbaijan's fine artists.

Other decorative features are also being added in the building, including enlarged posters of past issues of the covers of "Azerbaijan International" magazine starting with September 1993, "Alphabet Transition."

AIOC Contributions Program
The AIOC Contributions Program focuses on education, science, culture and sports and emphasizes programs that can benefit a fairly large number of people. Recently, AIOC organized a matching gift program that resulted in the purchase of textbooks for 1,400 refugee children in the Saatly (sa-at-LI) region. A group of employees went to the camps on September 15th to personally deliver books to the children.

Music and Dance Series
The AIOC/SOCAR Community Concert Series is underway. It opened with a Henry Purcell Commemorative Concert organized by the Camerata firm and performed at the German Church (kirke) on November 24th. An organist, four singers, a string quartet and an expanded string orchestra performed in the beautiful hall which has excellent acoustics. Purcell's melodic works were fully appreciated by the large audience of invited guests and members of the public who responded to AIOC's advertisement offering tickets free of charge.

The Antigua Girls' choir, conducted by Mark Shapiro, will perform December 20th. This group includes young women from age 8 to 18, and has performed for President Heydar Aliyev when he visited the AIOC stand at the 1995 Caspian Oil and Gas Exhibition. Again the concert will be held in the German church and accompanied by an organist.

AIOC Contributes to Metro Tragedy
AIOC President Terry Adams met with Azerbaijan's President, Heydar Aliyev, following the Baku Metro disaster on October 28th to express AIOC's deep sympathy to the families of the 300 victims of the accident. AIOC made a $50,000 contribution: $25,000 was presented to the government commission established to deal with disasters and the remaining $25,000 will be used to purchase needed special equipment for Azerbaijan's Emergency Services.

Einar Bergh is AIOC's Manager of Government and Public Affairs in Baku.

From Azerbaijan International (3.4) Winter 1995.
© Azerbaijan International 1995. All rights reserved.

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