A Production Sharing Agreement (PSA) with SOCAR was entered and signed in 2010 (the “Balakhani PSA”).The above-referred onshore oil fields were awarded to our Group by Azerbaijani Government under the Balakhani PSA in 2010 after the long-term negotiations and bidding evaluation procedures. These onshore oil fields were inherited from the Soviet times and were obsolete with the collapsed infrastructure and a huge number of employees.

Confirmed by the independent inspections and audits, we have achieved the following progress under the Balakhani PSA:

- all 1,450 employees working before signing the Balakhani PSA have kept their jobs and no mass dismissal ever took place. In contrast, dozens additional employees, including expats have been hired since the effective date of the Balakhani PSA;

- As per the requirements of the Balakhani PSA (Article 5 “Rehabilitation and Production Programme”) we have invested hundreds millions $ financing into the re-habilitation and re-development of these oil fields. The Group has not benefited from any profit under the Balakhani PSA as of the date and all proceeds have been re-invested into the fields rehabilitation, re-development, infrastructure, equipment and facilities improvement;

- For about 40 brand new oil wells have been drilled since the effective date of the Balakhani PSA;

- Hundred millions $ taxes have been paid to the State Budget of the Republic of Azerbaijan under the requirements of the Balakhani PSA;

- Under the Balakhani PSA’s Development Programme oil extraction volumes have been increased 1,5 times (572 tones in 2009 base year v. 858 tones in 2013). We are using best Western technologies and specialists for the purposes of effective exploitation of these oil fields;

- We have substantially improved the environmental situation on the oil fields spending multimillions for these purposes; 

- For the short time period salaries of employees have been increased for 51%;

- We have agreed to continue supporting the social programmes inherited from the Soviet times. The programme on providing homes to employees has been approved by the Ultimate Beneficial Owner and is financed from his personal income. Under this social programme 18 families – employees of the Balakhani Operating Company will be provided with homes. It is planned that in the future for about 300 families will be also provided with their own homes. 

Balakhani-Sabuncu-Ramana and Kurdakahni Oil Fields “Before” and “After”: