Azerbajian May Have Second Source of Gas for Europe
The State Oil Company of Azerbaijan (SOCAR) has announced of a possibility of a new source for export of natural gas to Europe: deep-laying gas in the Azeri- Chirag-Gunashli oilfield block below the present contract area of Azerbaijan International Operation Company (AIOC),
SOCAR first vice president Khoshbakht Yusifzadeh has stated that production of deep-laying gas on the ACG block could begin in 2017.
"The scheme of extraction is simple - production will start first from the Chirag and Gunashli fields, and then from Azeri field," he said.
Reserves of such gas at ACG total 200-250 billion cu m,” Yusifzadeh said. He did provide any estimates annual production volumes.
Adviser to SOCAR vice president Vitaly Beylarbeyov noted that production of deep-laying gas will not demand additional work, as the contract area has been studied quite well and the excellent infrastructure created by AIOC.
"Typically, organization of production on such projects takes 7-8 years, but in this case, all possible is much earlier," he said.
At the same time SOCAR Investment Department’s head Vagif Aliyev informs that negotiations on this issue are continuing intensively.
"Previously, the variant of service contract was under consideration. Now we have returned to the classic form of a contract for us, such as PSA, and this can be accomplished within the existing contract for ACG block. In this case, all the AIOC members will become participants of the project of deep-laying gas production," Aliyev said.
Reserves of deep lying gas are estimated in 200-250 bn cu m. Its production in Chirag and Gunashli fields can start already in 2017 and later in Azeri field.
The deep-lying gas is on the depth lower than contract depth of AIOC which has to deliver SOCAR all the associated gas not used for technological purposes.
Initially BP, which leads the AIOC consortium, was expected to be the project’s operator but the composition of shareholders will not coincide with AIOC’s composition of shareholders. At present, BP holds an operating interest in AIOC of 37.43 per cent. Other stakeholders are Chevron Corp., Inpex Corp and Itochu Corp.at 11.27 per cent, 10.96 per cent and 4.30 per cent respectively, with the remaining interests held by AzACG , a subsidiary of SOCAR (10 per cent), Statoil ASA (8.56 per cent), Exxon Mobil (8.00 per cent), TPAO (6.75 per cent) and Hess (2.72 per cent).
If production of deep-laying gas starts in 2017, then Azerbaijan will have two guaranteed sources for natural gas exports to Europe - gas from Stage 2 of Shah Deniz Project and deep-laying gas from ACG. This will change drastically the whole picture: not 16 billion cu m but at least 25-30 billion cu m will be directed for export additionally.
Source: Azerbaijan Business Centre