Chevron Obligated to Drill Second Well in Caspian Sea

Chevron Corp will not be excused its obligation to drill a second exploratory well in Azerbaijan's Absheron gas field, according to SOCAR. Chevron has said it is considering whether to drill again after a first well in the offshore field failed to find any commercially significant reserves. Chevron has been considering an option to pay compensation instead. SOCAR has stated that compensation is not an option since the production-sharing agreement requires that they drill.

SOCAR geologists believe the Absheron field holds up to 700 billion cubic meters in recoverable oil reserves and have criticized Chevron for sinking the first well too far from the center of the field. Chevron is the operator of the Absheron field and holds a 30 percent stake. SOCAR has a 50 percent stake while TotalFinaElf holds the remaining 20 percent.