SOCAR may explore Caspian gas field in 2007

Khoshbakht Yusifzade, first vice president of SOCAR, said that if his company wanted to proceed before February 2007, it would first have to resolve legal issues with U.S. oil major ConocoPhillips, which is party to a memorandum of understanding (MOU) over the block.

The memorandum between the two companies, which expires in February, has not led to a joint deal to explore the block.

"According to the MOU, we will have to wait till it expires to independently start operations on the block," Yusifzade told Reuters.

Umid-Babek is expected to produce 14-15 billion cubic metres of gas a year at its peak, according to SOCAR's estimates.

Yusifzade said exploratory drilling with a semi-submersible platform owned by Denmark's Moeller-Maersk would provide data for calculating reserves and could open up the gas field.

Yusifzade also said that SOCAR planned to start operations on the Nakhichevan offshore block on the expiry of its liabilities to another U.S. oil major, Exxon Mobil which previously was the operator and owned 50 percent in the project.

Last year, Exxon pulled out of exploring the block after its exploration well did not find commercial quantities of oil in 2002. It paid Azerbaijan around $50 million in compensation.

Nakhichevan's reserves are yet to be precisely calculated. Reuters