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    SOCAR, Total Co-operation Enters New Stage



Total and Socar will establish joint company to develop the Absheron offshore gas field

by: Ilham Shaban

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Top Stories, Baku–Tbilisi–Ceyhan (BTC) , South Caucasus (Baku-Tbilisi-Erzurum|BTE), News By Country, Azerbaijan, Caspian Focus

SOCAR, Total Co-operation Enters New Stage

State Oil Company of Azerbaijan Republic (SOCAR) is entering a new stage of cooperation with Total SA in the development of Azerbaijan’s second largest natural gas field.

Eric Meyer, planning development manager at Total Exploration & Production Azerbaijan B.V., announced on September 28th that the French company has completed the preliminary Front End Engineering Design (FEED) for the Absheron gas condensate field in the Azerbaijani sector of the Caspian Sea.

Meyer added that preparation work was being undertaken for the formation of JOCAP (Joint Operating Company Absheron Petroleum), where SOCAR and Total would each hold a 50% stake.

Vagif Aliyev, head of SOCAR's Investments Department, told Natural Gas Europe that “according to the terms of signed contract between two companies (in 2009) to develop Absheron gas field, in the exploration stage, Total should serve as operator, but during the operational stage of developing the project, it should adopt “cooperation” with SOCAR.”

“We are currently in the second stage and SOCAR will accompany Total in cooperation at project development management and Azerbaijani experts will entirely involve in the operational works permanently.”

The Absheron offshore project participants are SOCAR - 40 percent, Total - 40 percent and Gaz De France Suez - 20 percent. The field is estimated to hold 350 billion cubic meters of gas as well as 45 million tones of gas condensate. Discovered in 2011, the Absheron block lies under about 500 meters of water in the Caspian Sea, 100 kilometers from Baku.

Commenting on the management issue, Aliyev said that managing the development operations would be based on "No profit, no loss" principal.” Joint Operating Company Absheron Petroleum (JOCAP) will prepare the development plan of the project,” he said.

Total's Meyer said that the French company received permission from the Azerbaijani government regarding the placement of the platform in the shallow waters of the Caspian Sea, outside the PSA area.

Answering about installing the platform out of project site, Aliyev said that placing platform in shallower waters pushes the costs and expenditures.

The final investment decision on the project is to be made in Q4 2017 with drilling of the first well expected in the last quarter of 2019. According to the forecasts, first volumes of gas from the Absheron will be received in Q4 2021.

A reliable source informed Natural Gas Europe that the production amount would be increased in several stages to reach 7-8 billion cubic meters per annum in several years (after 2021).  The source commented that in first stages, produced gas is planned to be delivered to the domestic sector.

During the 3rd Azerbaijan and Caspian Sea Oil & Gas Week 2015 conference in Baku on September 28th, Meyer also said that a permit is required for the construction of Total’s own terminal in the Sangachal settlement of Baku that is 7km away from the shore.

Meyer said the gas will be collected and processed in the terminal, and from the terminal, it will flow into the local area network for domestic consumption and to the South Caucasus Pipeline for export.

There are also plans to build a pipeline from the terminal connecting to the Baku-Tbilisi-Ceyhan pipeline, through which the condensate will be exported, according to Trend News Agency quoting the Total official.

Absheron gas field's next development milestone will be the submission and approval of the development program first by the joint venture partners and finally by Azerbaijani authorities.

Ilham Shaban is Director of the Azerbaijan Centre for Oil Studies in Baku