February 22, 2008

Gutseriyev Affiliate Buys Stake in Two Oil Blocks in Azerbaijan – Source

MOSCOW. Feb 22 (Interfax) - Global Investment Energy, an affiliate of former RussNeft owner Mikhail Gutseriyev, has acquired a stake in two companies with licenses to develop two oil blocks in Azerbaijan from Canada's Nations Energy Co. Ltd., a source familiar with the terms of the deal told Interfax.

In particular, Global Investment Energy acquired 85% of Karasu Operating Company (KAOC), which is developing the Mishovdag- Kelameddin block, and 80% of Kura Valley Operating Company (KURA), the operator of the Pada-Kharami block, the source said.

The source said Global Investment Energy belongs to Gutseriyev.

"All the legal aspects have been completed, and Global Investment Energy is the full-fledged owner of these companies," the source said.

The State Oil Company of the Azerbaijani Republic (SOCAR) owns the remaining interests in the companies.

Gutseriyev announced in July that he was resigning as president of RussNeft and withdrawing from all his former business projects. RussNeft said earlier that Gutseriyev intended to undertake scientific activities in Russia. In August, a court issued a warrant for his arrest. He is currently on the international wanted list.

At present, RussNeft affiliates own 75% of a contract for the development of the Govsany-Zykh block of fields in Azerbaijan in addition to a stake in a contract for the Binagadi field.

The Govsany-Zykh fields are located on the southern tip of the Apsheron peninsula and the contract zone covers 65 square kilometers. Residual commercial reserves total 12 million tonnes of oil. The Zykh field was identified in 1935 and production totals 25 tonnes of oil and 20,000 cubic meters of gas a day. Govsany was identified in 1948 and production totals 260 tonnes of oil and 90,000 tonnes of gas a day.

The Binagadi block near Baku includes eight fields: Binagadi, Girmaki, Chakhnaglar, Sulutepe, Mazasyr, Fatmai, Shabandag and Sianshor. The block has a total area of 4,300 hectares and has been developed since 1896. Total geological reserves are 132 million tonnes of oil and recoverable reserves are at 12.8 million tonnes.

The contract zone for Mishovdag-Kelameddin covers 446 square kilometers. Kelameddin holds remaining oil reserves of 14.5 million tonnes and recoverable reserves of 4.5 million tonnes. Residual reserves at Mishovdag total 43.8 million tonnes and recoverable reserves total 5.4 million tonnes. The fields are in southwestern Azerbaijan 150 kilometers from Baku.

The Padar-Kharami block neighbors Mishovdag-Kelameddin and has a contract zone of 1,500 square kilometers.

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