Caspian Overview: Full Steam ahead on Southern Corridor
The European Commission said it has found the Host Government Agreement between the Greek authorities and the Trans Adriatic Pipeline (TAP) to be in line with EU state aid rules on March 3. The statement came several days after vice-president of the European Commission responsible for Energy Union Maros Sefcovic visited Baku.
The second meeting of the Southern Gas Corridor (SGC) advisory council was held on February 29. Azerbaijan's energy minister recently said that the construction of TAP would start next month.
TAP has also issued two new invitations to tender, the official website of TAP reported.
The Trans-Anatolian Natural Gas Pipeline (Tanap), the South Caucasus Pipeline (SCP) and TAP form the elements of SGC, to transport Azerbaijan's gas to Turkey (6bn m³/yr) and Europe (10bn m³/yr) where it will compete for market share with Russian pipeline gas and LNG, among others.
BP is also moving forward with the SCP expansion (SCPX) which means building 380-km pipeline in Azerbaijan and two compressor stations in Georgia.
BP announced on February 29 that the SCP consortium (including SCPX) spent $1.1bn in capital expenditure during 2015, up $200mn year on year.
Coming to Tanap, the general manager of the project says the line was progressing well with 320 km of pipes welded and 600 km of trenching dug.
SGC envisages the transportation of gas from the giant Shah Deniz field in Azerbaijan to Europe with a 3,500-km journey from the Caspian Sea. The field development and associated pipelines are estimated to cost $45bn.
In central Asia, a consortium of Japanese and Turkish companies have proposed an investment of between $15bn and $20bn in gas processing facilities in Turkmenistan.
Turkish Renaissance Heavy Industries (RHI) as well as Japanese JGC and Chiyoda are negotiating with the Turkmen government over the price.
Both RHI and Chiyoda are already involved in big projects in Turkmenistan and the new one includes building facilities to remove impurities such as CO2, sulphur and water from natural gas, extracted from the Galkynysh field, one of the largest gas fields in the world.
The country exported about 27bn m3 to China during 2015, while Russia cut imports from 11bn m3 in 2014 to 4bn m3 in 2015 and stopped altogether early this year.
According to a document obtained by NGE, Turkmenistan’s third client, Iran, bought 35% more gas. It has imported 7.8bn m3 so far this fiscal year, which ends March 20.
Turkmenistan announced February 29 that it plans to construct 400 km of gas networks to supply remote villages and settlements in 2016. The country laid and reconstructed 800 km pipes last year.
In Kazakhstan, the direct foreign investment inflow in oil and gas sector fell by 72% to $1.9bn in 8 months of 2015, Kazakh National Bank announced on March 2.
Last year, the central Asian republic produced 45.3bn m³ of natural gas, about 5% more than the previous year. However, this year it plans to produce only 43.5bn m³. Last year, exports reached 12.4bn m³, up 4% on 2014, and they are expected to be down to 11.6bn m³ this year.
Tethys board secures final agreement
And the board of Tethys has reached an agreement with local player Olisol, preserving the company but losing their jobs. Their $15mn loan agreement has been amended so that all but $1mn will be converted into shares at $0.10/each, giving Olisol 15.6% of the company, once all the Canadian stock exchange approvals have been given.
Further capital injections and a loan from a Kazakh bank will leave Olisol owning about 42% of the enlarged company.
After the first drawdown of the loan, the present board will step down: the CEO John Bell, David Henderson, David Roberts and Jim Rawls.
Bell commented: "Tethys now has a strong in-country strategic partner which has committed to becoming a minority shareholder and who will help the company in its objective to supply the growing energy demand in China.” He will become a non-executive co-chairman.
He said that the company had halved its general administrative cost to $9.5mn in 2015 and to a target of $6mn on an annualised basis. It had also achieved “certain vital exploration and production licence extensions, as well as overseen an increase in production.”
The deal ends the anxiety of shareholders, who had been hoping for a deal for many months. Last summer, local producer Nostrum Oil & Gas tried to buy the company at C$0.147/share, but although talks went on through the autumn the two failed to reach terms, which included a $20mn loan.
Iran desk