Unocal joined with other company representatives in signing a resolution sanctioning the Phase 3 development of the giant Azeri-Chirag- Deepwater Gunashli (ACG) field in the Azerbaijan sector of the Caspian Sea.

"The sanctioning of the Phase 3 development is an important step toward making this resource a million-barrel-per-day producing field," said Don Hansen, vice president for International Energy Operations. "With this phase, we will employ the lessons we learned from the development work to date in Phases 1 and 2 and capitalize on the economies of standardized field development."

The Phase 3 project represents the next significant development phase of the ACG production-sharing agreement (PSA), which is operated by Azerbaijan International Operating Company (AIOC). Phase 3 offshore facilities will comprise a 48-slot drilling, utilities and quarters platform that is bridge-linked to a production, compression, water injection and utilities platform in Deepwater Gunashli.

The start of oil production from Phase 3 is currently planned for mid-2008. All associated gas, except for fuel requirements, will be delivered to the State Oil Company of Azerbaijan (SOCAR). The field's gross recoverable oil is estimated at around 5.4 billion barrels.

Unocal Khazar Ltd., a wholly owned Unocal subsidiary, has a 10.3-percent interest in the ACG PSA and AIOC.

Ownership in the AGC PSA and AIOC also includes SOCAR (10% working interest) and eight other foreign oil companies: BP (operator, 34.1%), INPEX (10.0%), Statoil (8.6%), ExxonMobil (8%), TPAO (6.8%), Devon (5.6%), Itochu (3.9%), and Amerada Hess (2.7%).

The development of the ACG field has been divided into four parts: Early Oil and Phases 1, 2 and 3. The Early Oil project is currently producing about 148,000 barrels of oil per day (gross). Phase 1 is expected to come on line in 2005; Phase 2 in 2006. Total production from the fields is expected to peak at more than 1.1 million barrels of oil per day in 2009 after Phase 3 comes on line.