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Canada's Zenith produces first oil in Azerbaijan

25 August 2016 09:51 (UTC +04:00)

Baku. Agshin Rafigoglu – APA-Economics. Canada's Zenith Energy Ltd. is pleased to announce crude oil production of approximately 300 barrels of oil per day in Azerbaijan under Zenith’s banner. This milestone marks the successful completion of the handover process and the transfer of operatorship to Aran Oil Operating Company (“Aran”), an entity jointly created and owned by Zenith Aran Oil Company, a 100% subsidiary of Zenith Energy ltd (“Zenith Aran”) and SOCAR, the State Oil Company of Republic of Azerbaijan (the national oil company).

In proportion to their ownership of Aran, Zenith Aran, a wholly-owned subsidiary of Zenith, will hold an 80% participating interest in current and any increased future production, while a SOCAR Oil affiliate company (fully owned by SOCAR) will retain 20% of production. These companies were created to fulfil the Rehabilitation, Exploration, Development and Production Sharing Agreement (“REDPSA”) for the production, development and exploration of the 642.4 square kilometer onshore concession encompassing the three fields of Muradxanli, Cafarli and Zardab in the Republic of Azerbaijan. The duration of the REDPSA is 25 years, with a potential extension of 5 additional years.

Zenith Aran will continue to utilize the existing domestic personnel and supplement their expertise with international talent while focusing on building daily production and expanding the proven reserves for the 642.4 square kilometer concession. Zenith’s corporate commitment to Azerbaijan has been well received since the Company was granted Presidential Approval in October 2015 to establish a REDPSA with SOCAR (the national oil company of Azerbaijan).

The REDPSA between Zenith Aran and SOCAR was signed on March 16, 2016 and ultimately ratified by the Azerbaijan Parliament on June 14th, 2016, after receiving the decree of the Cabinet of Ministers approving the sovereign guarantee on April,26, 2016 and Parliamentary Ratification on June 14th, 2016. Subsequently, the President of the Republic of Azerbaijan, Ilham Aliyev, signed the REDPSA into law effective 30 June 2016.