BP and Azerbaijan's state oil company SOCAR said May 25 that they had signed a memorandum of understanding (MoU) to jointly explore prospects in a new block, D230, in the North Absheron basin of the Caspian Sea.

The move reflects efforts by SOCAR and foreign companies to make new discoveries in the oil-rich country.

BP said that as a part of the government's plan to ensure all of Azerbaijan's offshore waters are fully explored, the MoU gives BP the exclusive right to negotiate an agreement with SOCAR to explore and develop block D230.

Block D230 covers areas in a water depth of up to 300 m, with a reservoir depth of 3,000 m to 5,000 m.

SOCAR President Rovnag Abdullayev told reporters the final agreement was expected to be signed this autumn.

BP is a main investor and operator of two major projects in Azerbaijan—he Azeri-Chirag-Guneshli (ACG) oilfields, which account for most of Azerbaijan's output, and the Shah Deniz offshore gas field, which is estimated to contain 1.2 to 1.5 Tcf of gas.

Shah Deniz I has been pumping gas since 2006, while gas from its second stage is expected to reach Europe by 2019-2020.

BP's regional head told Reuters in March it expected flat oil production in 2016 at its ACGoilfields, where output totalled 31.3 million tonnes last year, down slightly from 31.5 million tonnes in 2014.

No other major contracts have been signed in Azerbaijan since these major projects were sealed in Baku, although many other foreign companies are involved in exploration in the ex-Soviet country.

Among the most prized prospects are two gas deposits in the Caspian Sea—Umid and Babek —with total preliminary reserves of about 600 Bcm of gas.

Offshore