Caspian & Iran Overview: Baku Eyes Gas Imports from Rivals
Despite progress in upstream projects and increasing gas exports, Azerbaijan is looking at gas imports from Russia or Iran to meet its domestic needs.
Azerbaijan's state energy company Socar is planning to buy natural gas from Russia’s Gazprom, the company head Rovnag Abdullaev said March 14.
Socar is in talks not only with Russia but with Iran as well, Abdullaev said, adding that Socar is considering importing up to 3bn m³ this year.
He argued that Azerbaijan has two underground gas storage facilities and wants to inject 3bn m³ of natural gas to these facilities to test their final capacities. The mentioned facilities are estimated to have 5bn m³ of storage capacity together, while only 2bn m³ of gas have been injected there.
He also argued that Azerbaijan needs more gas to re-inject into oil fields to maintain crude oil production level in the Azeri, Chirag and Guneshli il fields (ACG).
During last year, some 3.2bn m³ of associated gas, extracted from ACG, were delivered to Socar, while 9.2bn m³ were re-injected. However, for 2016, the re-injection volume is projected to increase, and then there will be less associated gas to be delivered to Socar from ACG.
Azerbaijan signed an agreement with Georgia in March 4 to export an additional 0.5mn m3/yr of gas. Azerbaijan delivered about 2.1bn m³ of gas to Georgia in 2015.
Azerbaijan’s exports are rising while its deliveries of gas to power plants are being replaced with heavy fuel oil. According to documents, obtained by NGE, the natural gas delivery to petrochemical plants is also projected to decrease by 1000 metric tons compared with last year to 64,000 mt in 2016.
On the other hand, Azerbaijan’s statistics committee reported on March 17 that the country’s total gas production (including re-injected gas) rose by 2.5% to about 4.95bn m3 during the first two months of 2016, but commercial gas production dropped by 8.3% to 3.155bn m3.
Azerbaijan is also preparing to develop several projects, but no significant gas output growth is expected in near future.
Socar launched a production rig in its section of the offshore Guneshli field, platform number 7, on March 14.
Socar's vice-president for oil and gas production and transportation Rahman Gurbanov told NGE that the rig would drill 6 wells in 2016 and the total from all six would be 150mn m³/yr.
He added that the number of new wells in Guneshli field would reach 20 in the coming years and most would be oil. Then another 12, mostly gas, wells would be drilled.
Despite the low oil price, BP is continuing its other two exploration projects in Azerbaijan: the shallow-water Absheron Peninsula (SWAP) and Shafag-Asiman.
While SWAP could be moved to the exploration drilling by the end of 2017, Shafag-Asiman’s future is uncertain owing to a shortage of semi-submersible drilling rigs in Caspian that are suitable. None of them are expected to become operational in a decade.
BP also started preparation for Shah Deniz stage 3 implementation – the biggest layer of Shah Deniz – with 500bn m3 of gas reserves) and the collection of data from the Caspian Sea field. But the development of this phase is not expected before 2020 owing to the need to develop the second stage, aimed to produce and export 16bn m3/yr of gas to Turkey and Europe by 2020.
Central Asia
Turkmenistan’s president Gurbanguly Berdimukhamedov visited Pakistan on March 17 and discussed the long-delayed Turkmenistan-Afghanistan-Pakistan-India pipeline project, aimed to transit 33bn m3/yr of gas by 2019. Turkmenistan has 85% share in the $10bn-project and other states own each one 5% share.
The cost of Tapi is more than one third of Turkmenistan’s yearly budget, which was $29.37bn last year.
It’s not clear with absence of any international major company, how Turkmenistan would finance the project, while the oil and gas prices are very low and the country faces a number of economic problems.
Berdimukhamedov expressed confidence during a meeting with Pakistan’s prime minister Nawaz Sharif that the Tapi project will be successfully implemented and give an impetus to regional and global development in the near future.
Coming to Uzbekistan, South Africa's Sasol said it is reviewing its plans to participate in construction of a $5.6bn gas to liquids (GTL) plant for production of synthetic fuel in Uzbekistan, citing current low oil prices as its reason. It represents part of a wider reining-back of Sasol's plans in the GTL sector.
However, in upstream sector, Uzbekistan is eyeing developments.
The double-landlocked central Asian republic expects to see 8% more spent this year than last on developing and upgrading the gas industry. This year’s investment is planned to reach $2.798bn, according to the decree of the president Islam Karimov in late January.
The leadership of the Uzbekneftegaz national holding company (NHC) told Trend on March 16 that Uzbek-Chinese joint venture ‘New Silk Road Oil & Gas Company plans to start developing gas condensate fields at the Karakul investment block in Uzbekistan’s Bukhara region this May.
Gazprom and Uzbekneftegaz signed a contract on March 15 for the purchase of 4bn m3 of Uzbek gas in 2016, or about 4 times more than 2015.