BAKU, Azerbaijan, Oct.13
By Leman Zeynalova – Trend:
Nagorno-Karabakh’s close proximity to key Azerbaijani oil and gas infrastructure means that there will be more at stake if the conflict escalates further and jeopardizes key export pipelines, Trend reports citing Rystad Energy.
“The Baku-Tbilisi-Ceyhan (BTC) oil pipeline and the South Caucasus Pipeline (SCP) gas conduit both run through Azerbaijan, with some sections lying as little as 25 miles from renewed fighting in Nagorno-Karabakh. Any attack on or seizure of pipeline territory could have serious ramifications for upstream operations in Azerbaijan, and particularly impactful would be any disruption to the giant Azeri-Chirag-Gunashli (ACG) project in the Caspian Sea. These fields, operated by BP, produce about 485,000 bpd of light oil, representing approximately 75 percent of Azerbaijani crude production. Most of the oil from these fields is exported via the BTC pipeline which, despite its nameplate capacity of 1.2 million bpd, has been operating at half capacity.
“The South Caucasus Pipeline carries gas from the Shah Deniz field in the Azerbaijani sector of the Caspian Sea to the Turkish border, where it links with the Trans-Anatolian gas pipeline (TANAP) that runs through Turkey. TANAP, having commenced operations in 2018, will in turn link up with the new Trans Adriatic Pipeline (TAP), thus enabling Azerbaijani gas exports to flow to southeastern Europe,” the company said.
“The pipelines are laid two meters underground, so there is protection there from material damage. However, while it is still too early to forecast possible production disruptions at the offshore ACG and Shah Deniz fields, any scenario where Armenian forces manage to take over territory traversed by export pipelines represents a potential threat to oil and gas exports in the region,” says Rystad Energy’s upstream analyst Swapnil Babele.
“Azerbaijan currently exports more than 80 percent of domestic oil production through the BTC pipeline, with output from the ACG fields representing the lion’s share. The Light Azeri crude is transported through Georgia and onward to the Port of Ceyhan in Turkey, and from there to European markets via the Mediterranean Sea.
“Small volumes of Azerbaijani oil are also exported via two other pipelines. The Baku-Suspa pipeline, operated by BP and with a capacity of 150,000 bpd, is used mainly to export oil from coastal offshore deposits. It starts at the Sangachal terminal near Baku and runs to the Suspa terminal near the Georgian coast, where oil is then shipped to European markets through the Bosphorus Strait in Turkey. Then there is the Baku-Novorossiysk pipeline, which carries oil from onshore fields operated by Azerbaijani state energy company SOCAR for export to the Russian Black Sea port of Novorossiysk. The transmission capacity of this pipeline is 100,000 bpd. Azerbaijan could increase flows through the Baku-Suspa and Baku-Novorossiysk oil pipelines, but this workaround could only compensate for half of the exports that normally flow through BTC. Some crude volumes are also exported via rail from Azerbaijan to the Batumi and Kulevi terminals, located on Georgia’s Black Sea coast,” said Rystad Energy.
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