Azerbaijan’s energy monopoly SSOCAR produced 5.4% less gas in the first five months of the year than in the same period of 2015. Output stood at 2.65bn m3, according to SOCAR’s latest figures, of which about 2.3bn m3 were produced by Azneft, Socar’s production company. The remainder came from joint ventures established by Socar and foreign companies under production-sharing agreements (PSA).
SOCAR extracted 6.871bn m3 of commercial gas in 2015, while total production in Azerbaijan reached 19.72bn m3. The total raw gas production also stood at 29.5bn m3 last year, while the latest statistics indicate that Azerbaijan’s total raw gas output rose by about 114mn m3 to 12.5bn m3.
Baku forecasts commercial gas output to exceed 20bn m3 in 2016, which would be its most ever.
Azerbaijan’s gas production (mn m³)
SOCAR 2016 |
SOCAR 2015 |
Total 2016 | Total 2015 | |
May |
535.6 |
576.1 |
2520.1 |
2454.7 |
Apr |
519.2 |
555.6 |
2474.9 |
2482.3 |
Mar |
547.8 |
580.4 |
2583 |
2589.4 |
Feb |
504.4 |
519.1 |
2368 |
2330 |
Jan |
543.1 |
570.2 |
2520 |
2496 |
Total |
2,650.1 |
2,801.4 |
12,466 |
12,352.4 |
Source: Government
The fall in Socar’s gas output triggered preparations for a new round of talks with Russian giant Gazprom over gas imports, at 3-5bn m3/yr. BP is also producing less marketable gas as it is switching to reinjection into the Azeri-Chirag-Guneshli block to maintain oil output. Socar also wants to test the actual capacity of its underground gas storage facilities, estimated at around 5bn m3. But an official source told NGE that Baku is seeking a bigger discount in Russian gas prices.
A Socar delegation will be in Russia this week attending the International Economic Forum in Saint Petersburg on June 16-18.
Socar also added to its capital expenditure in several projects, including Shah Deniz stage 2 (SD2) and the Southern Gas Corridor (SGC).
Azerbaijan’s sovereign wealth fund, Sofaz, saw its income from the first phase of Shah Deniz fall sharply from January to May 2016, standing at $64mn.
A source from Sofaz told NGE that its income from SD1 totalled $323mn in 2015 and $523mn in 2014. The oil price collapsed in the summer of that year. “From 2007 till June 1, 2016 the profit from SD1 has totalled $2.5bn. From 2016 to 2018 the gas profit of Azerbaijan from this project is forecast to be much less, because the costs of the Shah Deniz-2 project will be high.”
Sofaz SD1 income, year-to-date
Months | Income ($mn) |
January | 4 |
February | 10 |
March | 26 |
April | 5 |
May | 19 |
Total | 64 |
Source: Sofaz
The contract for development of the Shah Deniz field was signed in Baku on June 4, 1996 and ratified by the parliament on October 17, 1996. The project partners include BP (operator with 28.8%), Malaysian Petronas (15.5%), Socar (16.7%), Lukoil (10%), National Iranian Oil Company (10%) and Turkish TPAO (19%).
Despite low oil prices and increasing Azerbaijan’s expenditures, the country gained from the falling price of steel and other materials needed to develop projects. The TransAnatolia gas pipeline (Tanap), will cost $2bn less to build, for example, owing to that and to better co-operation.
http://www.naturalgaseurope.com/caspian-overview-azerbaijan-talks-with-gazprom-30126