NOV. 21 2016 (The Conway Bulletin) — French energy company Total signed an agreement to develop the first phase of the Absheron gas and condensate field in Azerbaijan, a major boost for the country’s oil and gas sector, although it also said that production levels would be far lower than originally projected.
Total discovered Absheron in 2011 and owns a 40% stake in the project. Other shareholders include state- owned SOCAR (40%) and ENGIE, a French utility company (20%).
The company had said the field, off the Absheron peninsula, around 60km from Baku, would produce 5b cubic metres (bcm) of gas annually in the first stages and between 7 and 8 bcm at a later stage. But Total’s latest press release told a different story.
“The development involves the drilling of one well at a water depth of 450 meters. Production from this high pressure field will be around 35 thousand barrels of oil equivalent per day, including a significant portion of condensate,” Total said.
This means that yearly production volume would be around 2.1 bcm, 60% smaller than originally planned.
Analysts said that the Azerbaijani government has pressured Total into producing at Abershon ahead of the original target start date, possibly forcing it to cut output targets.
“If they previously planned to produce first gas in 2022, now they talk about the beginning of 2020,” Ilham Shaban, head of the Caspian Barrel research outfit, told the Vestnik Kavkaza website.
Absheron’s gas will compensate for declining domestic production in Azerbaijan, according to Total.
“The produced gas will supply Azerbaijan’s domestic market,” the company said.
Azerbaijan’s gas production has flatlined in recent years to around 19bcm and it is poised to decline this year.
ENDS
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(News report from Issue No. 306, published on Nov. 25 2016)
