June 6 (Bloomberg) -- RWE AG, Germany’s second-biggest utility, plans to conclude its talks with State Oil Co. of Azerbaijan this year over exploring and developing the Nakhchivan natural-gas area in the Caspian Sea.
RWE will sign a production-sharing agreement with Socar, as the Azeri state company is known, and possibly another partner, Martin Wellens, RWE’s general manager for new ventures in Europe and the Commonwealth of Independent States, said today in Baku, the capital of Azerbaijan. RWE will be the operator, he said.
RWE and Socar signed a memorandum of understanding in March 2010 for Nakhchivan, about 45 kilometers (28 miles) off the Azeri coast. The area was first explored by Exxon Mobil Corp. in 2001 and 2002 before being abandoned when no fuel was found. Socar estimates the block may contain 300 billion cubic meters of gas and 40 million metric tons of condensate, or light oil.
The timing for the start of exploration at the structure will depend on the availability of rigs, Wellens said.
Socar on June 4 agreed with Singapore-based Keppel Corp. to build a modern drilling rig at an estimated cost of more than $1 billion. The companies are also in talks on a second rig to be built at the same time, Socar President Rovnaq Abdullayev said. Azerbaijan needs two more rigs to explore and develop offshore fields including Nakhchivan, Babak, Umid and Absheron, he said.
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