Wood Mackenzie: Azerbaijan to produce billions of barrels of oil in coming decades

By Azernews

By Rasana Gasimova

Current investments in Azerbaijan’s Azeri Chirag Guneshli and Shah Deniz projects, including potential for new phases, will open billions of barrels of oil equivalent over the next decades, Ashley Sherman, Principal Research Analyst at Wood Mackenzie, an international consulting company in the Caspian region and Europe, told Trend.

“Azerbaijan’s energy sector is strengthened by the two world’s largest oil and gas projects - Azeri Chirag Guneshli and Shah Deniz, contracts for which were extended until the late 2040s. Current investments, including potential for new phases, will open billions of barrels of oil equivalent during the next decades, "Sherman said.

However, according to the analyst, Azerbaijan should compete for investment in new oil and gas projects due to the changes in global industry.

The energy sector of Azerbaijan still has a significant untapped potential.

"The country must also adapt to the energy transition and new expectations when oil demand reaches its maximum. This includes acceleration of the renewable energy sources development within the country for a sustainable energy sector and economy," Sherman added.

The analyst noted that, just like in other countries of the Caspian region, new oil and gas projects in Azerbaijan are often becoming more technically and commercially complex.

"The easy projects have mostly been completed. Further exploration and production of gas from reservoirs at great depth and pressure in the deepwater areas of the Caspian Sea is to be done. Shafag-Asiman exploration well developed by BP and SOCAR is a good example. This is a very complicated well that offers enormous resources for the long-term development, "Sherman said.

The analyst added that the use of the latest technologies and cost management will be the two main priorities for the oil and gas sector of the landlocked Caspian Sea.

Azeri Chirag Guneshli (ACG) is the largest oil and gas field in the Caspian Sea, covering more than 432 square kilometres. Proven oil reserves of ACG block of oil and gas fields are estimated at 1.2 billion tons, while gas reserves make 350 billion cubic meters.

A contract for the development of ACG block of oil and gas fields was signed in 1994 for 30 years.? The recent agreement signed in 2017 provides for the development of the field until 2050.

Shah Deniz is a giant gas condensate field, reserves of which are estimated at 1.2 trillion cubic meters of gas and 240 million tons of condensates. Within the second stage of field development, the volume of gas production can be increased to 24 billion cubic meters per year, according to forecasts.

Shah Deniz 2 is the starting point of the new Southern Gas Corridor, which will deliver Caspian resources directly to European markets for the first time through TAP pipeline as an extension of TANAP.