NEW GAS FIELD DISCOVERED IN AZERBAIJAN
A new major gas discovery in the Caspian Sea by the French oil company Total SA strengthens Azerbaijan’s position in gas negotiations with Europe and Russia. This improves the prospects for the EU-backed Nabucco pipeline to transport Caspian gas to Europe and reduce European dependence on Russian energy supplies. The company revealed on September 9 that is has encountered “more than 500 feet of cumulated net gas pays” at the Absheron X-2 well. “The well’s first results confirm a potential of several trillion cubic feet of gas and associated condensates,” a statement on Friday read. The discovery was made in what Total termed “high quality sands” on the northern part of the structure which is spread out over 270 square kilometers. “Reservoirs are expected to extend over the entire northern part of the structure,” the company stated. The discovery was made at a depth of 6550 meters but drilling is set to continue to explore for possible deeper objectives.
Marc Blaizot, the Senior Vice President for exploration at Total, said “this discovery could be very significant in terms of resources. It is the result of Total’s bolder exploration strategy aimed at exploring high risk/high reward prospects both in prolific and frontier basins particularly in high pressure, deeply buried reservoirs.” The well is located 100 kilometers south-east of Baku and 25 kilometers north-east of the Shah Deniz gas and condensate field. Total operates the block at a 40 percent cut with Azerbaijan’s State Oil Company (SOCAR) holding the same share and GDF Suez at 20 percent.
In a meeting with a Total delegation on September 9, Azerbaijan’s President Ilham Aliyev stated that “the discovery of a new gas field would further strengthen Azerbaijan’s standing among the world’s biggest producers of gas. This will enable us to promote our gas strategy even more confidently, secure further international recognition of Azerbaijan as an exporter of gas and protect the interests of the Azerbaijani people. Over the coming period … Azerbaijan will prove to be a world-scale exporter of gas, and the significance of our country will, without a doubt, further increase.”
The First Vice President of SOCAR, Khoshbakht Yusifzadeh, stated that gas extraction from Absheron can begin in 2021 to 2022. He adds that the field’s reserves are estimated to 350 billion cubic meters of gas and 45 million tons of condensate. “Now Azerbaijan’s overall reserves reach 2.2 trillion cubic meters of gas, and with this field our reserves are going to grow up to 2.55 trillion cubic meters,” Yusifzadeh said on September 9.
The find at Absheron marks the second success since SOCAR announced a gas find at the Umid structure in November. In addition, SOCAR expects high figures for the Babak structure in the Azerbaijani sector of the Caspian Sea. “I have already said that at the field Umid we have 200 billion cubic meters and Babak is expected to contain twice as much. Still, we expect results from the structures Asiman-Shafag, Nakhchivan and others,” Yusifzadeh said. SOCAR earlier estimated the reserves at Babak to 400 billion cubic meters of gas and 80 million tons of condensate. Azerbaijan’s president said that the country is doing “specific” work to diversify its export opportunities: “I am sure that all transit issues will be resolved before the end of this year, and new markets for Azerbaijani gas will thus be opened.”
According to analysts, it now time to get moving on the Nabucco pipeline project. “We are now entering a very serious phase, because the discovery of new gas reserves in Azerbaijan will assure investors and Azerbaijan can even be considered as the main gas supplier for Nabucco,” said Alexander Rahr, Director of the Russian/Eurasia Program in the German Council on Foreign Relations (DGAP).
Russia is competing for control of Caspian gas and has offered to buy all Azerbaijan’s surplus gas production in order to keep its monopoly position in the European market. The Russian gas monopoly Gazprom plans to build the South Stream pipeline to bring gas across the Black Sea to southern and Central Europe, which would compete with Nabucco. “Russia is a good partner,” EU energy commissioner Guenther Oettinger stated on September 12. “But it is in general not smart to rely on one partner for more than 50 percent.” According to Oettinger, Azerbaijan will also play an important role in European strategy: “Azerbaijan is the answer to many questions. That is why the EU should do its homework and support Nabucco.”
In early August, Azerbaijan’s Energy Minister said his government intended not only to function as a transit country for the gas pipeline on its way to the EU, but could also provide the region itself with gas. On September 12, the EU agreed to negotiate a treaty with Azerbaijan and Turkmenistan to bring natural gas from the world’s fourth-largest reserves across the Caspian Sea to Europe. “The European Union has adopted a mandate to negotiate a legally binding treaty between the EU, Azerbaijan and Turkmenistan to build a Trans Caspian Pipeline System,” the statement said. “This is the first time that the European Union has proposed a treaty in support of an infrastructure project.” It is the first time the EU’s member states have given the European Commission the power to design an external energy treaty on their behalf.
The European Commission will lead negotiations on the proposed pipeline, which is part of a planned corridor of pipelines known as the Southern Corridor, designed to reduce EU dependence on Russian gas imports. “Europe is now speaking with one voice. The trans-Caspian pipeline is a major project in the Southern Corridor to bring new sources of gas to Europe. We have the intention of achieving this as soon as possible,” the EU energy commissioner said in a statement. The treaty is another step in a continued effort to open up the huge Caspian gas resources to Europe.
