Aztag newspaper reported that information from the Russian Rusoil news service revealed that a Japanese oil company will cease its drilling operation in Azerbaijan.
After a period of exploratory drilling–the Japan-Azerbaijan Operating Company (JAOC)–the operator of the Ateshgyakh–Yanan Tava and Mugan Deniz block of structures in Azerbaijan–has concluded that available oil there does not justify the cost of production.
More than a decade ago–several US and European oil companies rushed to explore prospects in Azerbaijian–but also turned away disappointed.
On June 20–Azerbaijan’s 525 Gazet reported that JAOC–simply plans to reduce work at the blocks beginning July 1–and that the decision was reached after drilling of a second exploration well at the block failed to indicate commercial hydrocarbon reserves.
"We are not talking about totally winding up the project–as the exploration period set down in the contract has not yet expired–we are only talking about cutting back on the volume of work," the paper quoted company President Norito Sawara as saying.
A contract for the exploration and development of the Ateshgyakh–Yanan Tava and Mugan Deniz structures was signed in December 1998 by the State Oil Company of the Azerbaijani Republic (SOCAR – 50%)–Japan’s Itochu Oil (7.5%)–Japex (22.5%)–Teikoku (7.5%) and Inpex (12.5%). JAOC was set up in May 1999.
Planned investment in this project is $2.3 million. Possible hydrocarbon reserves amount to 80 million tons.