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09/12/2016

New discoveries improve the Southern Gas Corridor’s prospects

Energy

New discoveries improve the Southern Gas Corridor’s prospects

The Absheron and Shah Deniz gas fields.[Caspian Barrel]

Azerbaijan said natural gas produced in the Absheron offshore gas field in the Caspian Sea could be exported through the Southern Gas Corridor. Until now it was planned that only gas from Shah Deniz 2, another offshore field, would be sent to Europe.

The Deputy Energy Minister of Azerbaijan, Natig Abbasov, is quoted by Azerbaijan’s media  as saying that the natural gas produced in the Absheron field may be exported to Europe through the Southern Gas Corridor.

The Southern Gas Corridor (SGC) is an initiative of the European Commission for gas supply from  the Caspian Sea and Middle East to Europe. SGC consists of three pipelines: the South Caucasus pipeline across Azerbaijan and Georgia, the TANAP pipeline across Turkey, and the Trans-Adriatic Pipeline (TAP) across Greece and Albania, with an offshore section to southern Italy.

Work on the Trans-Anatolian Natural Gas Pipeline (TANAP) project is underway in accordance with the plan, the president of the Azerbaijani state oil company SOCAR, Rovnag Abdullayev, told reporters on 5 September.

He said that there are no problems with the implementation of the project.

“Partly, we are even ahead of schedule and 850 kilometers of pipes have been already welded,” Abdullayev said.

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In addition, he said that the project’s financing is not a problem and the Azerbaijani government is in talks to attract external resources.

The TANAP project, worth $9.3 billion, envisages transportation of gas of Azerbaijan’s Shah Deniz field from Georgian-Turkish border to the western borders of Turkey. Gas will be delivered to Turkey in 2018, and after completion of the Trans Adriatic Pipeline’s (TAP) construction, additional gas will be delivered to Europe in early 2020.

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Doubling the capacity?

TAP’s initial capacity will be 10 billion cubic meters of gas per year with the possibility of expanding it to 20 billion cubic meters.

Energy rich-Azerbaijan is expected to extract the first volumes of gas from the Absheron gas condensate field in the Azerbaijani sector of the Caspian Sea in 2019, said Khoshbakht Yusifzade, the first vice-president of SOCAR, addressing the first Eurasian conference of the International Association for Energy Economics (IAEE).

He said that preliminary estimates of reserves at the field stand at 350 billion cubic meters of gas (bcm) and some 45 million tons of gas condensate.

“Currently, the contractor is preparing a plan on the development of the field, according to the PSA contract (Exploration, Development and Production Sharing Agreement).  Certain steps are planned to be taken within the framework of the annual plan on gas production, including completion of exploration works on the implementation of the concept in September, approval of the development plan by partners in October, and approval of the program by SOCAR in early 2017. Final investment decisions on the preliminary production plan will be taken in the fourth quarter of 2017.  The first output well will be drilled in the third quarter of 2017 at the earliest,” Yusifzade said.

He underlined that discovery of such large gas-condensate fields as Absheron and Umid has significantly increased the possibility of the exposure of new oil and gas fields in the Azerbaijani sector of the Caspian Sea.

The PSA for Absheron Perspective Structure was signed in February 2009. Absheron project participants include SOCAR at 40%, the French companies Total at 40% and Gaz De France Suez at 20%.  The Absheron contract area is located in the Caspian Sea, 100 kilometres off of Baku, while its depth amounts to 500 meters.

The majority of oil and gas produced in Azerbaijan accounts for the ACG block of oil and gas fields, and the Shah Deniz gas and condensate field jointly developed by the State Oil Company of Azerbaijan (SOCAR) with foreign partners.

The Shah Deniz field, located on the deep water shelf of the Caspian Sea, 70 kilometres south-east of Baku, is one of the world’s largest gas-condensate fields.

Transit of gas from Turkmenistan

Yusifzade also mentioned that SOCAR is expecting to get positive results from the talks on the transit of Turkmen gas through Azerbaijan, adding that involvement in Azerbaijan’s pipeline infrastructure is advantageous for Turkmenistan.

“We possess pipelines till the midst of the Caspian Sea, which are located at a short distance from Turkmenistan,” he said.

Turkmenistan is discussing diversifying its gas exports and selling gas to European Union countries, President Kurbanguly Berdymukhamedov said on 29 August at a joint news conference with German Chancellor Angela Merkel.

Turkmen gas deliveries to the EU would come via the Caspian Sea, which will also require approval by Russia and Turkey.

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Yusifzade further said that the development of the Kapaz border field (the Turkmen side calls the field Sardar) is still on the agenda. “I believe that we will decide the issue in the short run,” he said.

The decision on the joint development of the Kapaz field before the signing of the convention of the legal status of the Caspian Sea may accelerate implementation of the Trans Caspian gas pipeline, which is considered to be one of the most popular energy projects that can allow Ashgabat to diversify its energy routes.

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