Gas extraction from the first well of Absheron gas field, located some 100km south of Baku in the Azerbaijani sector of the Caspian Sea, will start in early 2020, French energy company Total, one of the operators of the field’s development, announced on February 20 during public hearings on the Environmental Impact Report of the project. Extraction volumes at the first stage of development, whose cost is appraised at $1bn, will amount to 4.3BCM of gas and 12,000bbl of condensate. The annual output of this first stage is expected to reach 1.5BCM of gas, a quantity that will be processed onshore and then will flow into Azerbaijan’s local area network for domestic consumption, along with some condensate. Remaining condensate will be exported through the South Caucasus Pipeline (SCP). According to Total, drilling of the ABD-001 well, in a depth of 450m., is going to take place between March 2018 and March 2019 with the use of the ‘’Heydar Aliyev’’ semisubmersible drilling rig, which was dispatched from the offshore supply and logistics base of the Caspian Drilling Company (CDC) on February 23. Apparently, the target date for the beginning of gas extraction at Absheron, previously set by the French oil and gas major towards the end of 2019, has slipped a couple of months, owing to CDC’s need for an extra few weeks before launching ‘’Heydar Aliyev’’ into the sea.
In the course of that same presentation carried out last week in Baku, Total also divulged that construction of requisite infrastructure at the field, i.e. an export pipeline and a fixed platform, bridge-linked with SOCAR’s Oil Rocks facility, is going to be conducted from mid-2018 until late 2019. Total E&P Azerbaijan will deal with the pipeline execution and the Azneft Production Union of SOCAR will be responsible for building the platform and connecting it to Oil Rocks. In November 2017, a joint venture of SOCAR and the US KBR Engineering Company, the SOCAR-KBR Limited Liability Company (SK LLC), was awarded a front-end engineering design (FEED) contract to provide topsides for the platform, as part of Absheron’s first development phase.
Covered by a Production Sharing Agreement (PSA) between the Azerbaijani government and a consortium of Total (40%), SOCAR (40%) and GDF Suez (now Engie), who at a subsequent time acquired a 20% stake from Total, the Absheron discovery was made by Total back in 2011 with the drilling of the X2 well by Maersk Drilling’s ‘’Heydar Aliyev’’ drilling rig, recently renamed back to its original name, ‘’Maersk Explorer’’. The field’s gas reserves are estimated at 350BCM of gas and 45Mt of gas condensate. After Engie quit, in May 2017, its interest was equally split between the other two partners. Consequently, Total and SOCAR have come to terms regarding establishment on a parity basis of the Joint Operation Company for Absheron Petroleum (JOCAP), the project’s future operator, that will have been finalized in the second quarter of 2018. Contractual and commercial terms for the first phase of production are set out in a deal inked by SOCAR and Total in 2016, while the final investment decision (FID) is foreseen within 2018, following the postponement of deadlines for its adoption at the end of 2017.
Asheron is incorporated into a cluster of projects touching the planned or proposed development of several Azerbaijani fields, along with Umid/Babek, which, once onstream, are hoped to fill additional capacity in both the Trans Anatolian and the Trans Adriatic Pipelines (23-31BCM/a in TANAP and 20BCM/a in TAP by 2023-2026). A contribution of Absheron’s projected plateau production of 5BCM/a by 2025, ensuing from the timely implementation of its second development stage in 2022-2023, would most assuredly please the SGC stakeholders, since it would give them access to another yet supply source, apart from Shah Deniz. However, further unscheduled delays in investment associated with low oil prices, to the constraints of which offshore production often finds it difficult to adapt, as well as European gas hub prices at some point reducing the viability of Azeri exports, could essentially weaken the aforementioned hypothesis.
Available online at: http://www.caspianpolicy.org/energy/caspian-energy-insight-march-1-2018/#2
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