Privately held Russian oil producer Lukoil has become a minority partner in the Shallow Water Absheron Peninsula (SWAP) project in Azerbaijan, acquiring a 25% stake from operator BP.

The companies have not disclosed financial terms of the deal on a project where BP will remain operator with a 25% stake. An affiliate of Azeri state-owned oil and gas producer Socar will hold the remaining 50%.

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The SWAP exploration area stretches along the margins of the Caspian basin to the south of the Absheron peninsula. Water depths range up to 40 metres, with potential reservoir depths of between 2000 and 5000 metres.

The partners spudded the first exploration well on the acreage in the North Khali prospective area on 16 August, according to BP. The drilling is expected to be completed this year, with the hole planned to reach a total depth of up to 2424 metres.

BP earlier identified three prospective areas — North Khali, Bibi-Heybat East and Garabatdag — and said it plans to drill one exploration well in each.

Subject to approval from the government of Azerbaijan, the equity acquisition, with an effective date of 1 July this year, is expected to complete in the fourth quarter.

Kazakh splash

Lukoil has also moved forward in talks with Kazakhstan’s state-run KazMunayGaz on becoming a partner in two shallow-water exploration and development projects in the Caspian Sea.

Speaking on Thursday in the capital, Nur-Sultan, President Kasym-Zhomart Tokayev said authorities have resolved to go ahead with development of the Kalamkas-More and Khazar oilfields.

Both fields lie south-west of the giant Kashagan project, which is operated by the international consortium North Caspian Operating Company.

According to Tokayev, both projects may require capital investments of about $5 billion.

Recoverable reserves of the two tracts are estimated to be 500 million barrels of oil and 9 billion cubic metres of gas.

Lukoil has been investigating opportunities to expand its Caspian presence offshore Kazakhstan after Western oil majors lost the taste for long-term greenfield developments in the country and shifted investment to low-carbon and renewable projects.

Lukoil did not respond to Upstream’s request for information on the terms of its entry into the two projects or an expected time frame.

Meanwhile, Russian state-owned Zarubezhneft said it has signed a memorandum of intentions with KazMunayGaz to investigate its potential entry into onshore assets operated by the Kazakh company.

Zarubezhneft operates oil and gas fields in Vietnam, Russia and Cuba, and is involved in a brownfield enhanced oil recovery project in Uzbekistan.