Surakhani Oil Field

A Production Sharing Agreement (PSA) with SOCAR was entered and signed in 2006 (the “Surakhani PSA”).

The above-referred onshore oil field was awarded to our Group by Azerbaijani Government under the Surakhani PSA in 2006 after the long-term negotiations and bidding evaluation procedures. This onshore oil field was inherited from the Soviet times and was obsolete with the collapsed infrastructure and a huge number of employees. Confirmed by the independent inspections and audits, we have achieved the following progress under the Surakhani PSA:

 

- All 1,160 employees working before signing the Surakhani PSA have kept their jobs and no mass dismissal ever took place. In contrast, hundreds additional employees, including expats have been hired since the effective date of the Surakhani PSA (currently 1,427);

- As per the requirements of the Surakhani PSA we have invested hundreds millions $ financing into the re-habilitation and re-development of these oil fields. The Group has not benefited from any profit under the Surakhani PSA as of the date and all proceeds have been re-invested into the fields rehabilitation, re-development, infrastructure, equipment and facilities improvement;

- For about 60 brand new oil wells have been drilled since the effective date of the Surakhani PSA;

- Hundred millions $ taxes have been paid to the State Budget of the Republic of Azerbaijan under the requirements of the Surakhani PSA;

- Under the Surakhani PSA’s Development Programme oil extraction volumes have been increased 2,2 times (250 tones in 2004 base year v. 573 tones in 2013). We are using best Western technologies and specialists for the purposes of effective exploitation of these oil fields (Note: There is no any analogy achievement in Azerbaijan in onshore oil fields exploitation) ;

- We have substantially improved the environmental situation on the oil fields spending multimillions for these purposes;

- For the short time period salaries of employees have been increased for 51%;

- Surakhani Operating Company is active in social programmes as well. Over 20 families with low income and Karabakh war veterans have been taken into custody and are financed by the company.

 

Surakhani Oil Field “Before” and “After”: