ChevronTexaco, Total Compensate SOCAR For Undrilled Well

Total and ChevronTexaco paid approximately $40 million to SOCAR, the state-owned oil company in Azerbaijan, as compensation for not drilling a well in the Absheron project.

Total and ChevronTexaco, which control 20% and 30% respectively of the Absheron project in the Caspian Sea, had to drill two wells under the contract. However, the first well, drilled in 2001 showed no commercial reserves of oil or gas.

Total and ChevronTexaco decided not to drill the second well and exit the project. "The companies paid around $40 million of compensation and thus fulfilled all their obligations to Socar," a Socar official told Dow Jones Newswires.

ChevronTexaco is even mulling closing its office in Baku, the capital of Azerbaijan. "ChevronTexaco will continue to work in Azerbaijan in the foreseeable future, even though the representative office may be closed," a Baku-based spokesman said. Total and ChevronTexaco will be legally involved in the Absheron project until 2006.

Azerbaijan already had to close a number of projects because drilling showed no commercially viable reserves. These were Dan-Ulduzu/Ashrafi, Karabach, Oguz, Kurdashi, Lenkoran/Talish-Deniz and Muradkhanli.

A Japanese consortium Japan Azerbaijan Oil Corp. is currently in the final round of talks with Socar to close an oil project Atashgyakh-Yanan-Tava-Mugan- Deniz because no oil was found there.