Ilham Shaban: "Oil production in Azerbaijan will not be lower than 40,000,000 tons per year until 2030 if advanced technologies of hydrocarbons production are applied"

- It has become a sort of a tradition - it is the third year that we are talking on the issue of "black gold" with you on the Oilmen Day in Azerbaijan. What has changed in the life of local oilmen?

- I have not recorded any revolutionary changes in the work life of local oilmen through the past year. As usually, they worked without the comfort, such as BP-Azerbaijan provides for its employees, they fulfilled their professional duties in hard conditions (especially, offshore oilmen) and, unfortunately, there are still cases of death of SOCAR oilmen at workplaces. By official data of SOCAR, there were seven facts of lethal cases last year.

The number of oilmen continues to grow and by the recent data it has topped 64,000, though there were just 58,000 in 2005. It grows mostly due to SOCAR's implementation of social projects of a republican concern. SOCAR is consolidating its non-profile structures, as it builds diagnostic centers, hospitals, kindergartens, libraries, holds educational actions and lays road, for which it is even buying an asphalt plant. Therefore, today some base area employees have even better conditions that the oilmen "on the front". It means that the real life of a drillman is no better than of an activist from a social department.

Certainly, oilman's living conditions are better than they were several years ago. Today, oilmen earn twice as much as an average citizen of Azerbaijan and the profession of an oilman is likely to be one of the most urgent one in the country in the future, as our future will long depend on the oil sector. Owing to the rise in SOCAR's revenues ($6,500,000,000 in 2007), it has already started to build homes for its employees and promises to set "the oilmen campus" in the 8th kilometer settlement soon.

- Which events can be singled out through the past year?

- There were sufficient positive events in the oil life of Azerbaijan through the past year.

As the most significant one, I would single out the announcement of BP-Azerbaijan President Bill Schreider, made on the first day of the conference Caspian Oil and Gas - 2008, according to which there is a potential for raising the overall volumes of production from the Azeri-Chirag-Gunsehli contract area up to 9 bln barrels (1.2 bln tons) of oil from the current 5.4 bln barrels (730 mln tons). In this case, the term of stable production of over 1 mln barrels of oil per day (over 50 mln tons per tear) at the Azeri-Chirag-Guneshli field can be prolonged not from 2009 until 2013, as planned earlier, but from 2009 until 2019.

Just before this event, one of the leading international research centers on energy Global Energy Studies, headquartered in London, announced that oil production in Azerbaijan will not drop lower than 40 mln tons of oil per year until 2030 if advanced methods of hydrocarbons production are applied.

Such promising forecasts really open new horizons before Azerbaijan.

- It means that the statements of Azerbaijani geologists about hydrocarbon reserves, which were mostly perceived as fantastic, are true.

- Certainly. But it requires specifications, for example, on the same Azeri-Chirag-Guneshli field, for the supposed oil reserves there are even greater. But not the overall reserves, but extractive ones, which have a real value, are important for a company. Therefore, the data on oil reserves of Azerbaijan will be changed by the international organizations, after the Azerbaijani government comes to an agreement with BP on the said issue. Otherwise, we would not be able to get these additional 3.6 bln barrels, though the reserves have been proved.

The thing is that application of quite new technologies is required to raise the production rate of hydrocarbons. One of the effective technologies in this field belongs to BP. The British oil giant, applying it in Alaska - the famous Prudhoe Bay field, raised the oil production rate from the expected 40% up to 60%, which resulted in the increase of the field operation terms.

However, technologies are too expensive. Azerbaijan is still unable to pay for these services and naturally it will content itself with oil volumes.

- The Day of Azerbaijani Oilmen, marked since 2001, is connected with the contract of the century. What is new there, along with the aforementioned facts?

- There were numerous significant events in the operation of the contract of the century in 2008. Let's begin with the positive ones - the last field of the bloc - deepwater Guneshli - was launched in April. Moreover, within a short period of its operation, the daily production was raised to 85,000 barrels.

Yet, problems emerged in the last month of summer. Thus, the BTC pipeline was set ablaze near the Turkish Erzindjan on the night of August 6. There have not been any official conclusion about the causes of the blast. This was followed by the war in Georgia, which resulted in the complete suspension of the oil transportation via this country both by the pipelines and by the railroad. Therefore, oil production has dropped by over 10 times.

A new disaster hit the international consortium in September - this time due to the abnormal situation around the Central Azeri producing platform, which is the biggest one in the Caspian Sea. They had to cease production at the Western Azeri field due to the rise in the number of gas bubbles. The results are frustrating: daily production has fallen twice from the previous 900,000 barrels and perhaps it will be even lower if specialists do not assess the threat of gas flows for the technical facilities of the consortium.

- What about the revenues in the framework of the contract of the century?

- They are growing rapidly. Owing to high oil prices on the world markets this trend will be preserved further even though after 2010 the consortium will launch construction of two producing platforms to maintain the production rate of about 1 mln barrels daily. The consortium outcomes reached $17.5 bln since 1995 by earlier this year. Yet, in 2007 the consortium gained $17 bln from oil export, which neutralized the expenses for 18 years. By preliminary data, in 2008 the overall expenses of the consortium will make $2.5 bln, while oil export gains have topped $15 bln through the first half of the year.

- Did Azerbaijan's share in the profit oil of the consortium reached the top under such financial achievements?

- According to state officials, Azerbaijan's share reached 80% in the second quarter of the year. But mass media referring to them publish controversial data (they earlier said that Azerbaijan's share makes 55% from January 1,80% from April 1 and now they state that it was 50% and 75% respectively and so on), which makes it difficult for independent experts to make their own calculations on the basis of this data. At the same time, there is no information about profit oil sharing in a form of an official announcement of any body or a company.

Therefore, I prefer to speak of a different matter: about 950 mln barrels of oil have been extracted since the start of production in the Azeri-Chirag-Guneshli and of this volume Azerbaijani side received just 99.8 mln barrels of crude in a form of profit oil.

According to the data of the National Bank for the first half of 2008, the revenues in the framework of the contract of the century were about $15 bln. By official information of the State Oil Fund, through this period Azerbaijan received profit oil in the amount of
AZN 4,804,600,000 (about $5.9 bln).

/Day.Az/