[Premium] Baku Eyes Sept Shah Deniz 2 Start

Azerbaijan plans to inaugurate the BP-led offshore Shah Deniz 2 development this autumn, perhaps September if all goes well, and to set SD1 production at 11bn m³/yr, which will be 11% more than 2016, state-run oil company Socar told NGW.  Baku also plans to transfer the first revenue from SD1 to the state oil fund after have spent the revenues on SD2 for the last 17 months. Gas condensate production will go up 4.4%  on last year to 54,500 b/d.

Shah Deniz 2 output, Socar said, will begin with a small amount initially and increase gradually from 2bn m³/yr rate. So the volume this year will not be significant.

The operator of the TransAnatolian Pipeline (Tanap) has announced that the gas injection tests into the Turkish pipe would be carried out in January, but an official told NGW that the gas source would be SD1, not SD2.

A BP source told NGW that in 2019 SD2 is expected to produce 2bn m³ which would all go to Turkey. “Azerbaijan’s total gas export to Turkey (SD1&2) is expected to reach 8.5bn m³ in 2019, compared with 6.5bn m³ in 2017 and to reach its contractual 12.5bn m³ in 2021."

Azerbaijan plans to export 16.18bn m³/yr SD2 gas to Turkey (6bn m³/yr) and EU by early 2021 through the Southern Gas Corridor (SGC), comprised of the South Caucasus pipeline extension(SCPX), Tanap and Trans Adriatic pipelines (TAP).

 The State Oil Fund of Azerbaijan (Sofaz) also told NGW that the fund expects $428.9mn in profit from SD1 in 2018. The figure was zero during May 2016- December 2017, because of financing SD2 and gas purchases from SD1.

During Jan-May 2016 Sofaz received some $65mn profit from SD1. The rest of revenues during last two years ($710mn) were directly spent on SD2 and gas purchase from SD1. Spending on SD2, including SCPX, is down 99%, Azerbaijan's president Ilham Aliyev said January 11.  So that means a lot lower expenses this year. But if Socar needs more gas, it could buy from SD1 in 2018 as well.