Minister: SGC to provide gas for South-East Europe, to open 30,000 jobs

/By Azernews/

By Gulgiz Dadashova

A complex gas pipeline infrastructure will be created in Europe and a number of countries will be provided with Azerbaijani gas following the implementation of the Southern Gas Corridor project, said Natig Aliyev, Azerbaijani energy minister.

The minister made the remark while addressing the Caspian Oil & Gas Conference in Baku on June 2, further adding that the implementation of the project envisages creating the complex infrastructure of gas pipelines in South-East Europe.

"The Ionian-Adriatic Pipeline (IAP), through which the Azerbaijani gas will be supplied to Montenegro, Croatia and Bosnia and Herzegovina, is planned to be constructed. The Hungary-Romania Gas Interconnector with a capacity of up to six billion cubic meters (bcm) of gas, which will be also connected to the Southern Gas Corridor, is also planned to be built,” he explained.

"The Slovak-Hungarian Gas Interconnector with a capacity of five bcm a year has been already built," the minister said, emphasizing that over 30,000 jobs will be created after the implementation of the project.

The minister positively assessed the interest of the Balkan states in the Azerbaijani energy projects. "It is obvious that all Balkan countries are supporting us and are interested in our projects," the minister said.

The Southern Gas Corridor envisages the transportation of 10 billion cubic meters of Azerbaijani gas from the Caspian Sea region to the European countries through Georgia and Turkey.

At the initial stage, the gas to be produced as part of the Stage 2 of development of Azerbaijan's Shah Deniz field is considered as the main source for the Southern Gas Corridor projects. Other sources can also connect to this project at a later stage.

As part of Stage 2 of the Shah Deniz development, the gas will be exported to Turkey and European markets. The Shah Deniz Stage 2 will result in increased exports to Europe once the needed infrastructure is completed.

The country has the capability to provide additional gas export volumes beyond Shah Deniz phase 1 and 2 developments from 2021-2022 onwards, when the Absheron field will come on-stream.

Natig Aliyev, talking to reporters, said that the work to be done on the Southern Gas Corridor project will cost $40 billion.

He noted that in the current environment on the oil market the price of the materials used in the construction of the pipelines decreased. “And this naturally means lower spending on the Southern Gas Corridor project.”

"Trans-Anatolian gas pipeline (TANAP) was estimated at $11 billion, whilst the funds to be invested in the pipeline construction decreased by $9.3 billion. Re-assessments on the planned expenditures are being carried out on a regular basis. Currently, Shah Deniz-2 and the South Caucasus Pipeline Expansion project are estimated at $23.8 billion," Aliyev added.

The minister emphasized that the important thing is that the drop in oil prices didn't affect implementation of the projects.

"All the work goes in accordance with schedule and there are no delays," the minister said. "The work regarding Shah Deniz-2 project has been finished by 71 percent, TANAP by 55 percent and TAP by 10 percent."

Meanwhile, SOCAR President Rovnag Abdullayev stressed that Azerbaijan is able to increase its natural gas production to 40 billion cubic meters per year.

Abdullayev, addressing the conference, announced that Azerbaijan's natural gas production had grown four times to reach 29 billion cubic metres in the past 10 years

"SOCAR's Azneft Production Union has developed 49 fields so far. The foundation of 9 platforms in order to drill 81 wells will be laid in 2016-2017," he said.

Abdullayev noted that a total of $41 billion was invested in the Azeri-Chirag-Guneshli (ACG) field blocks. "Five billion barrels of oil is planned to be produced from ACG by 2024. Moreover, by increasing the oil production coefficient, extra four billion barrels of oil will be extracted," he added.

The contract on development of the ACG block of oil and gas fields, called as the Contract of the Century, was signed between SOCAR and foreign partners in 1994. BP is the operator of the development of the ACG block of oil and gas fields.

The oil from the ACG block is exported via the Baku-Tbilisi-Ceyhan and Baku-Supsa pipelines, as well as by railway to the Georgian port of Batumi.

Gordon Birrell, BP's regional president for Azerbaijan, Georgia and Turkey, said that two platforms to be installed as part of the Shah Deniz 2 will be ready in 2018.

Birrell added that BP will fulfill its part of work on the Shah Deniz-2 project on time and within the framework of the budget set.

"The work on the territory of Azerbaijan and Georgia continues," Birrell said. "We have already drilled nine out of 26 offshore wells, and that will be sufficient for the initial gas production and its further expansion at the field."

"Construction of upper modules of the platforms is being completed and all residential units have been installed on them," he said. "Nearly $700 million has been already spent on the construction work. The upper modules will be ready to be commissioned in 2017."

The contract for development of the Shah Deniz offshore field was signed on June 4, 1996. The field's reserve is estimated at 1.2 trillion cubic meters of gas.

The shareholders in the contract are BP, operator (28.8 percent), AzSD (10 percent), SGC Upstream (6.7 percent), Petronas (15.5 percent), Lukoil (10 percent), NIOC (10 percent) and TPAO (19 percent).