New Contract in the Works for Massive Azerbaijan Fields -- But Deep Gas Is Not Covered
A new production sharing agreement that will enable expansion of the Azeri-Chirag-Guneshli (ACG) mega-structure in the Caspian Sea, offshore Azerbaijan, is due to be signed. The deal will be signed by SOCAR and the BP-led international consortium currently participating in ACG project and will cover a period beyond the expiration of the current contract in 2024.
According to State Oil Company of Azerbaijan Republic (SOCAR) officials, the new deal will cover a period of another 35 years until 2060. SOCAR says that, after 2024, a significant amount of extractable oil and gas will remain in ACG to extract but more time and huge investment will be required to recover those resources.
Additionally, the new deal will not include development of deep-gas resources laid under oil reservoirs in Azeri-Chirag-Guneshli .
ACG deep-gas development has been under separate discussion between SOCAR and the BP-led ACG partners for several years.
“If deep-gas production were to be included into the new ACG contract, it would delay its start up and put it sometime after 2026-2027. However we need more gas sooner," sources involved in talks said.
Azerbaijan is keen to start producing deep-gas from ACG earlier, from 2019 at the latest, as it needs to expand gas production.
The country's government has plans to double gas production up to 40 billion cubic metres a year by 2025, a figure that includes future output from the ACG deep-gas reservoir.
Azerbaijan has made huge investments of $45 billion (USD) for developigas projects, including the giant Shah Deniz field and the construction of a pipeline chain to deliver gas from it to Europe, called the Southern Gas Corridor (SGC).
According to the energy minister Natik Aliyev, the construction of the SGC, in addition to existing pipelines to Russia, Georgia, Turkey and Iran, could help not only Azerbaijan but other countries.
“All this infrastructure should be used effectively, and not only by Azerbaijan, but also by other countries,” he said.
According to SOCAR, the ACG deep-gas reservoir holds about 250-300 billion cubic metres of recoverable natural gas reserves.
Kama Mustafayeva