Ilham Shaban: "The Absheron contract with Total opens new era in Azerbaijani gas sector"

Yesterday, SOCAR and Total signed a framework agreement in Baku on principles regulating development of the Absheron project, SOCAR President Rovnag Abdullayev and CEO of Total, Patrick Pouyanne. The head of the 'Caspian Barrel' Center for Oil Research, Ilham Shaban, told Vestnik Kavkaza about the significance of this event for the Azerbaijani oil and gas industry.

- In your estimation, how significant is development of the Absheron field for Azerbaijan?

- The Absheron field is the second largest gas field in the Azerbaijani sector of the Caspian Sea after the Shah Deniz field. The beginning of its development means that there is a phased development of gas fields in the Caspian Sea. Since 1950, there was a methodical development of oil fields only in the Caspian Sea, and before the Shah Deniz field was found, only very small gas fields, like the Bahar, which was opened in 1968, were known in the Azerbaijani sector.The start of Absheron development is the second stage in the development of Azerbaijan's gas industry, which follows a huge deposit of Shah Deniz, and it will not last: the turn of the Umid-Babek and Bulla deposits will come soon.

- Whether is Total's participation in the development of the Absheron field profitable for Azerbaijan?

- If you compare BP and Total, which have been working in Azerbaijan for a long time, then Total is more qualified in gas production technologies, than oil technologies. The appearance of such a technology company like Total in the Azerbaijani sector increases competition between companies and guarantees the reliability of gas production, because the complexity of the Absheron field is similar to the Shah Deniz field's complexity, with the only difference that there is depth of even more than 550 m in some areas, therefore, it is a very complex field with high pressure. Total will use the same development system with the application of robots, which will operate on the Shah Deniz field in 2018. The fact is that it is not possible to set a platform for gas production at such a depth, no traditional IT systems, which were previously used in the Caspian Sea, are applicable here, we need Total's latest technology.

- Who will be the most likely consumer of gas, extracted from the Absheron field?

- The development of the Absheron field will be held in several stages. Total announced that at the first stage it is planned to produce up to 35 thousand tons of oil equivalent per year, or about 2 billion cubic meters. This is the primary gas, which will fully go to Azerbaijan's domestic market. Look, if they previously planned to produce first gas in 2022, now they talk about the beginning of 2020 – this is done to reduce the investment. And all the gas will be likely bought by SOCAR to send it to its gas processing facilities and the methanol plant in order to ensure the production with raw materials. Semi-finished products and other industrial products of these enterprises will be sold on the domestic market (about 25-30%) and the external market (70-75%). It will give the country a significant foreign exchange earnings, which will cover the costs of this project and the Shah Deniz project. Therefore, Azerbaijan will return the investment to the production of hydrocarbons and develop non-oil sector at the same time.

- At the yesterday's meeting Patrick Pouyanne also voiced Total's interest in developing the Umid-Babak structure. How is this offer attractive for Azerbaijan?

- It is really interesting. The second stage of the Absheron project development will give not less than 6 billion, and maybe even 8 billion cubic meters of gas annually. Now it is now possible to produce 3 billion cubic meters per year at the Umid field, and Babek is only an exploration project. I think the French agreed to cooperate with Azerbaijan to initially implement its gas in full, in small quantities on the domestic market, and in the future to increase the development to more than 10 billion cubic meters per year, and already this volume will be exported. By 2026, Azerbaijan plans to double the volume of the Southern Gas Corridor at the expense of those 10 billion cubic meters from the Absheron, Umid and Babek. According to the plans, development and increasing of the Southern Gas Corridor's power capacity will be in 2026-2027, in this case 1-2 years do not change anything,