BAKU, Azerbaijan, June 10. Baku Energy Week was held on June 4–6, within the framework of which the 29th Caspian Oil and Gas Exhibition and the 29th Baku Energy Forum were held, Trend reports.
Many discussions took place about the future of oil and gas.
TAP Managing Director Luca Schieppati told Trend in an interview that the Trans Adriatic Pipeline Consortium (TAP, the European part of the Southern Gas Corridor) is developing concepts for the future expansion of TAP, taking into account the use of electrically driven compressors. TAP expansion opportunities are offered through regular market tests in an open, transparent, and non-discriminatory manner. The total volume of gas transported through the Trans Adriatic Pipeline (TAP) as of May 1, 2024 (since December 2020 when it was launched) was 35 bcm. TAP's current capacity is 11.5 bcm per year.
On June 4, Türkiye and Azerbaijan signed an agreement in Baku on the extension of Azerbaijani gas supplies within Stage-1 of the Shah Deniz field development; the document refers to the annual pumping of 3.5 bcm of gas from Stage-1 of Shah Deniz through the Baku-Tbilisi-Erzerum (BTE) pipeline in 2025–2030 (Türkiye has been receiving gas from this stage since 2007 through this pipeline).
SOCAR and BOTAS have also signed agreements under which Azerbaijani gas will be transported to Europe via Türkiye (a transit agreement), to Nakhchivan from Türkiye (the Igdir-Sadarak gas pipeline to be completed in the fourth quarter of 2024), and an agreement on the transit of Turkmen gas to Türkiye via Azerbaijan.
Besides the BTE pipeline, Azerbaijan also provides gas to Twrkiye through the Trans-Anatolian Pipeline (TANAP). The trend was informed that the capacity of TANAP increased from 16.2 bcm per year to 17.5 bcm per year.
Turkish Energy Minister Alparslan Bayraktar, at the opening of the 29th International Exhibition "Caspian Oil and Gas" and the 12th Caspian International Exhibition "Energy and "green" energy" on June 4, noted that the world is experiencing a profound transformation caused by technological advances. At the same time, affordable and reliable energy supply is becoming extremely difficult every day, and the right balance must be found.
Senior Advisor for Multilateral Energy Diplomacy in the Bureau of Energy Resources of the US Department of State, Harry Kamian, emphasized during Baku Energy Week that Azerbaijan remains a consistent and trustworthy partner in promoting energy security in the region and Europe.
The Secretary General of the Gas Exporting Countries Forum (GECF), Mohamed Hamel, believes that global energy demand will increase by 20 percent by 2050. The increase in demand will be due to population growth, and 95 percent of the increase in this demand will be in developing countries. The socio-economic development of the world's countries and the doubling of the size of the global economy will also play a role.
Hungarian Foreign Minister Péter Szijjártó stated in Baku that Hungary's annual demand for gas is about 10 billion cubic meters, and only 10–15 percent of it Hungary can cover independently. He said the country still needs Russian gas to ensure energy security, but with the possible increase in gas supplies from, for example, Azerbaijan, Türkiye, and Qatar, the share of Russian gas may decrease.
On June 5, the Hungarian company MVM bought 5 percent of Azerbaijan's 21.02 percent stake in the Shah Deniz project and a 4 percent stake in AGSC (which oversees gas exports from Shah Deniz).
According to SOCAR, gas production at Shahdeniz is expected to reach 27.1 billion cubic meters in 2024 (26 bcm in 2023). Condensate production at the end of this year is forecast at 4.1 million tons (about 4 million tons in 2023). From December 2006 to May 1, 2024, the field produced 218.3 bcm of gas (155.2 bcm exported) and 45.9 million tons of condensate.
Head of MVM Group Károly Mátrai stated in Baku that Hungary's energy deals with Azerbaijan are an important element of MVM Group's strategy. He reminded that the company has an agreement with SOCAR to supply 100 million cubic meters of gas to Hungary, and 50 million cubic meters (from third countries) have already entered the Hungarian gas system in 2024. And the June 5 entry into the Shah Deniz project will give this Hungarian company more independence in covering its gas demand.
European Commission Director for Energy Policy Strategy and Coordination Cristina Lobillo Borrero noted in Baku that gas from Azerbaijan started flowing through the Southern Gas Corridor to Europe at the end of 2020. Statistics have been kept since 2021, and since then, natural gas supplies from the Shah Deniz field to the EU have increased by more than 40 percent.
An important source of gas for Azerbaijan is the Caspian field Umid. Trend has learned that it is expected to produce 2.3 billion cubic meters of gas in 2024. During the 11 years of development of this field, 9.2 bcm of gas and 1.4 million tons of condensate have been produced.
SOCAR is also pinning its hopes on the Bulla Deniz field, from which 12.4 million tons of oil (including condensate) and more than 69.9 bcm of gas have been produced as of May 1, 2024.
The Absheron gas condensate field in the Caspian Sea (operator TotalEnergies) is relatively new. It is planned to produce 1.5 billion cubic meters of gas and 523,000 tons of condensate this year. It has been producing hydrocarbons since July 2023, and as of May 1, 2024, the field had produced 1.2 bcm of gas and 484,000 tons of condensate.
Senior Vice President for Exploration and Production in Europe at TotalEnergies Jean-Luc Guiziou noted during a panel discussion on "Leadership Dialogue: Energy Security 2.0" at the 29th Baku Energy Forum that Azerbaijan and the Caspian Sea can supply gas to energy-hungry Western European countries throughout the energy transition period.
In addition to SOCAR and TotalEnergies, ADNOC (Abu Dhabi) is also a participant in the Absheron project. The company's Executive Director for Low Carbon Solutions and International Development, Musabbeh Al Kaabi, spoke in favor of further partnership with SOCAR during the 29th Baku Energy Forum. He recalled that at the end of May, SOCAR entered the Abu Dhabi mining project with a 3 percent stake, and the cooperation will continue.
Azerbaijan's key oil field is Azeri-Chirag-Guneshli (oil has been recovered since 1997 and performance has been falling in recent years), and SOCAR Vice President Babek Huseynov said that this block should first reduce the rate of production decline and then maintain the achieved production level for some time. He added that after achieving the targets set for ACG, SOCAR will switch to the development of new fields and will most likely start with the Karabakh field in the Caspian Sea, where there are confirmed oil reserves.
Furthermore, an informed source told Trend that the partner companies of Azerbaijan's key Azeri-Chirag-Guneshli (ACG) oil project will discuss measures to stabilize the rate of production decline at this block of fields at a separate meeting in August this year.
SOCAR plans to increase the oil recovery factor at the Azeri-Chirag-Guneshli block of Azeri-Chirag-Guneshli (ACG) fields, vice president of the State Oil Company of Azerbaijan Babek Huseynov said on June 6. According to him, there are highly efficient wells on the block. Huseynov noted that the oil recovery coefficient at ACG is about 30–40 percent, but there are plans to bring it up to 50 percent. He mentioned that this will be possible due to the use of new infrastructure and technologies in this block of fields.
Moreover, a source in SOCAR told Trend this week that the first oil production from the Karabakh field (neighboring ACG) may start within the next 2–3 years.
bp regional president for Azerbaijan, Georgia, and Türkiye Gary Jones, mentioned during a panel discussion at the Baku Energy Forum that bp has high hopes for the results of the 4D seismic at ACG. He also said that in early 2025, the first gas will be produced from the deepwater Azeri-Chirag-Guneshli (ACG) reservoirs.
SOCAR, during the Baku Energy Forum, spoke in favor of the unification of standards for oil and gas operations in the Caspian Sea, taking into account the peculiarities of this region, which was announced by SOCAR Vice President Babek Huseynov.
SOCAR Vice President Arzu Javadova, in turn, said in her speech
that the Nakhchivan structure on the Azerbaijani Caspian shelf has
larger hydrocarbon reserves than previously estimated.
"SOCAR has recently conducted a new assessment of its resources,
and it showed that the reserves are twice to three times larger
than the indicators of previous studies," Javadova stressed.
Concluding the topic of gas, it can be noted that on June 7, the head of SOCAR discussed the prospects of the development of the world market for "blue fuel" with the head of Gazprom (Russia) in St. Petersburg.
The State Oil Fund of Azerbaijan (SOFAZ) reported on June 7 that for five months of the current year, revenues from the sale of oil from ACG on the world market (they are accumulated in SOFAZ) amounted to $2.6 billion (from January through May 2023, they amounted to $3 billion). Revenues from gas and condensate exports from Shahdeniz for January–May amounted to $244.069 million, of which $60.784 million was from condensate sales. Revenue from gas and condensate exports from Shah Deniz from January through May 2023 amounted to $935.7 million (including $197.763 million from condensate exports). The decrease in gas revenue in 2024 is due to the fall in global prices for "blue fuel" in the EU.
Also, Trend this week was informed that Azerbaijan is trying to raise environmental standards for the production of major petroleum products to "Euro-5," and in late June or early July, the Heydar Aliyev Baku Oil Refinery will begin production of motor gasoline to the standard of "Euro-5". In May 2023, the refinery started production of diesel fuel to Euro-5 standards.
The source added that in November 2024, the refinery and Azerkimya enterprises will be shut down for scheduled preventive maintenance for 1–1.5 months. The next such repair is possible in 2–3 years.
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