The purpose of the following is to explain the relationship between UGE-Lancer and SOCAR.
UGE-Lancer was awarded contracts for the Balakhani oilfield in 2010. Balakhani, in contrast to the highly prized offshore assets of Azerbaijan, is an onshore oilfield inherited from Soviet times with obsolete and collapsed infrastructure and substantial social programmes which any potential bidder would need to guarantee. As a result, onshore oilfields such as this one are generally viewed as too problematic and unattractive for foreign investors. It was in this context that SOCAR approved UGE Lancer’s offer – as it was both reasonable and commercially attractive. After several years of development, this has also proved to be a commercially attractive contract for both parties. All relevant data on SOCAR-UGE Lancer negotiations process was recorded and archived by SOCAR Investments Department.
The specific terms of the PSA required the investment of tens of millions of dollars, a near doubling of oil production, the restoration of infrastructure and the maintenance of a substantial workforce (in excess of 1,000 employees). Additionally, the contractor provided SOCAR and the Azerbaijani Government with a financial warranty in case it did not fulfil its obligations.
Financial information regarding UGE-Lancer is publicly available as the company is registered in Singapore, one of the world’s most transparent financial centres.
UGE-Lancer fulfilled all the required terms and conditions as contractor and investor under the signed PSAs pursuant to Azerbaijani law and SOCAR has no claims or remarks to UGE Lancer’s activities as to the contractor. For more information please read the section of this website on joint ventures and tendering.