CNPC officially enters oil and gas market of Azerbaijan

The China Petroleum Technology and Development Corporation (CPTDC), which is a subsidiary of the China National Petroleum Corporation (CNPC), has opened an office in Baku.

According to APA, the office was registered in the Ministry of Taxes of Azerbaijan on September 23rd. The CPTDC legal representative in Azerbaijan is Ouyang Lingyun.

The head of the Center for Oil Research, Ilham Shaban, told Vestnik Kavkaza that the CNPC has been working in Azerbaijan at the level of investment for 13 years. "It happened after the company implemented the K&K project in Azerbaijan. After that, they engaged an inactive oil production in the country, earning less than 100 thousand tons of oil per year, but volumes are declining due to old mines," he said.

According to Shaban, the opening of the CPTDC office indicates China's response to Azerbaijan's interest in the East. "It is necessary to take into account that this year the State Oil Fund invested over $400 million in assets of the National Bank of China. It also influenced the decision of the Chinese Government to open an office, because the CNPC is a state company," the expert said.

The head of the program 'Russia in the Asia-Pacific region' of the Moscow Carnegie Center, Alexander Gabuev, in his turn, believes that China is expanding its presence in the Caspian Sea. "It is not clear whether the CNPC plans to enter any new projects, but it is clear that the company has always been represented in Kazakhstan and Turkmenistan, and now it is interested in having a share in the various fields, given the low price, which allows it to buy assets at an attractive price. At the very least, China's interest in Transcaucasia is steadily growing. Naturally, the CNPC wants to at least start some kind of systemic work in the region. Baku is the right place to do it," the expert concluded.

The CNPC appeared in Azerbaijan in 2002, when it signed a production sharing agreement on the K&K (Kursangi-Karabagli) oilfield in the Kura River basin. In 2003, the CNPC bought a 62.83% holding in CGL and thereby acquired 50.26% of the equity of the Gobustan Oilfield. Since 2005, exploration drilling was launched in the deep zones of the field.

The expert Rovshan Ibragimov, in his turn, said that "if we consider how high the CNPC interest in the Caspian countries is, we can say that the opening of the representative office in Baku is even overdue. For example, about 40% of the production from fields in Kazakhstan are managed by a number of Chinese companies. In this case, I think it's part of China's policy on the formation of alternative energy sources, primarily from Central Asia and the Silk Road project," Ibragimov noted.

"Why is China interested in Azerbaijan? It is, first of all, gas fields. In addition, in recent years, Azerbaijan is looking for opportunities to operate in the deepwater fields from the Mesozoic layer. The rehabilitation of old fields is also possible, increasing their production and efficiency. I think that, in that sense, China can be our partner," Rovshan Ibrahimov stressed.