Agip Borrows Rig for Kashagan Drilling Project

Azerbaijan has agreed to lend one of its drilling rigs to the Agip-led group developing the Kazakh Kashagan field. The Azeri decision will speed up work in Kashagan, in the oil-rich but landlocked Caspian Sea where a rig shortage is an acute problem. The move underlines Kazakhstan's growing weight as a Caspian oil nation, where Azerbaijan has long held the limelight as the most promising prospect.

But a dozen untapped Azeri offshore fields are now waiting for rigs, and Western majors are not rushing to explore them after failing to discover oil in neighboring deposits.

Now the Gurtulush rig (Trident 20) is set to move to the more alluring waters of Kashagan. The Gurtulush (Trident 20) will head to the Kazakh Caspian shelf in the next few days, a spokesman for the Gurtulush Rig Club said in a statement. The Rig Club is comprised of Gurtulush's (Trident 20) main users - TotalFinaElf, ExxonMobil and Japanese JAOC - and is monitored by Azeri officials. TotalFinaElf and ExxonMobil are participants in the Kashagan project.

"We have obtained guarantees from Kashagan's operator Agip that the rig will return to Azerbaijan by October for the Japanese consortium," the spokesman said. Azeri officials declined last month to lend the rig to Agip as they hoped to persuade JAOC to drill a second well on an Azeri offshore structure immediately after the failure of the first exploration well in June. But JAOC's spokesman said the Japanese consortium persuaded Azeri officials to postpone the second well until October. Apart from Gurtulush (Trident 20), Azerbaijan has only two other modern rigs, currently working for BP, which is leading the only two successful offshore oil projects in Azerbaijan.

Agip said Kashagan, where four exploration wells have been already drilled, was set to produce its first oil in 2005. Besides Agip, the Kashagan consortium includes BG, TotalFinaElf, Shell and ExxonMobil, each with 16.6 percent of the shares. Phillips Petroleum and Inpex hold 8.33 percent each.