BAKU, Azerbaijan, September 5. The deal between the State Oil Company of Azerbaijan (SOCAR) and the U.S.-based Comstock Resources to acquire stakes in gas assets in the U.S. is a landmark and promising step for the Azerbaijani company, economic expert Ingilab Ahmadov told Trend.
“The news itself is positive and promising. This is one example of SOCAR’s gradually expanding involvement not only in downstream operations but now also in upstream operations, and in a region far from the shores of the Caspian Sea, Azerbaijan, and the wider region. Expanding SOCAR’s geographic reach and increasing the number of such partnership projects could bring the company long-term benefits, leading to further expansion of its geographic footprint and portfolio of contracts and projects,” the expert noted.
According to him, SOCAR is acquiring a 20% stake in the Comstock assets, which offers the potential for concrete returns given the value of these assets and the project’s future profitability: “In Western Haynesville, SOCAR is acquiring a 15% stake, which will subsequently be reduced to 7.5% once a 15% return on investment in these assets is achieved.”
He emphasized that the deal itself is unusual for SOCAR, since it largely involves shale gas and the U.S., that is, a completely different geographic context. According to the expert, developments in the global hydrocarbons market are contributing to the growing attractiveness of the U.S. gas market.
"Given current developments in the global hydrocarbon market, as well as changes in the Middle East and, more broadly, in Europe and Eurasia regarding supply routes, the U.S. gas market is becoming not only one of the main markets but also a key factor in maintaining balance in the global fuel market.
Entering a new market is typically the first step and is usually followed by the expansion of partnerships in other projects in the U.S. region,” he said.
According to Ingilab Ahmadov, this is a new direction for SOCAR, as the company previously had no such experience in the LNG sector: “This is a new direction for SOCAR because it largely involves LNG, which was not part of its previous operations. Given the current developments regarding transport routes in the Eurasian region and the Middle East, this direction is becoming very promising.”
He added that participation in U.S. projects could have a positive impact on SOCAR’s international positioning: “This is exactly what SOCAR needed to position itself as a company stepping into the spotlight with a strong statement in terms of a diversified portfolio and operations across different regions and geographies.”
Speaking about the significance of SOCAR gaining access to U.S. gas assets and Comstock’s experience in developing the Haynesville and Western Haynesville fields, the expert noted that he views the current deal as the beginning of further development: “It seems to me that this is just the beginning. Comstock itself isn’t that big of a company. Its market capitalization is about $4 billion or slightly more. But the main thing here is to enter the market."
“This is just the beginning, because market conditions are currently favorable for emerging companies and countries such as Azerbaijan and Kazakhstan. Global market conditions are contributing to this,” Akhmedov said.
According to him, the company may gradually gain more influence in the international market and acquire the necessary experience: “We will gradually see the company gain more influence and, in the eyes of global giants, join the ranks of companies that will have to follow the principles of international management, be more aggressive, and gradually gain experience. Because in this business, experience is what matters most,” the expert noted.
“At the dawn of the new oil era, when development of the Azeri-Chirag-Guneshli, Shah Deniz, and other fields began, there were only a handful of transnational corporations, oil and gas giants, on the global market capable of operating in such complex fields. At that time, companies such as SOCAR and KazMunayGas mainly acted as secondary partners and primarily provided support to global oil and gas giants,” Ahmadov noted.
He believes that our companies now have the opportunity to gradually shift the balance on the global market: “I believe we are now at a point where a real chance is gradually emerging to cross this Rubicon, and companies such as SOCAR and KazMunayGas can change the course of the game. The implementation of cutting-edge management concepts and technologies, as well as demonstrating operational efficiency, are the keys to our companies’ success. Increased competition in the global energy market also contributes to this.”
