ExxonMobil Pulls Out of Caspian Project

Exxonmobil has refused to drill the second mandatory exploration well in Nakhichevan, said Khoshbakht Yusifzade, first vice president of the State Oil Company of Azerbaijan (SOCAR). The project will be closed. “Currently we and ExxonMobil are negotiating compensation [for project termination],” Yusifzade was quoted as saying.

A top manager at SOCAR said the talks for another Caspian project, Zafar-Mashal, have started. Exxon Azerbaijan Operating Company (EAOC) lost $150 million in Zafar-Mashal last year.

In February of 2002, EAOC announced it found no substantial hydrocarbon reserves when it drilled the first exploration well up to the depth of over 6 km.

ExxonMobil is the operator under Nakhichevan project. SOCAR is its parity partner under Nakhichevan and, along with ConocoPhillips, has interest in Zafar-Mashal project. According to the sources with the oil community, ExxonMobile will also withdraw from Zafar-Mashal, discouraged by the drilling results of the well, which turned out most expensive in the Caspian. Should it happen, Exxon will have to indemnify SOCAR for Zafar-Mashal to add to Nakhichevan project.