Statoil to end transactions in Azerbaijan's projects in few weeks

By Aynur Jafarova

Statoil's transactions in Azerbaijan's Shah Deniz and the South Caucasus Pipeline (SCP) projects are expected to close in the next few weeks.

The news was announced by BP Azerbaijan Vice President for Shah Deniz Al Cook who talked to Nefte Compass on March 27.

The Norwegian company signed an agreement in December 2013 to divest a 10-percent share of its 25.5-percent holdings in the projects. The buyers are Azerbaijan's state energy company SOCAR (6.7 percent) and BP (3.3 percent).

"We're expecting both transactions to close in the next few weeks," Cook said.

After the acquisitions, the Shah Deniz co-investors and their shares in the project are as follows: BP, operator (28.8 percent), SOCAR (16.7 percent), Statoil (15.5 percent), Total (10 percent), Lukoil (10 percent), NICO (10 percent), and TPAO (9 percent).

Al Cook went on to say that BP is not in discussions with Total over its Shah Deniz stake.

He noted that the first gas volume within the second stage of development at the Shah Deniz field will be for sale in Turkey in late 2018, with the deliveries for European sales coming around "one year later," Cook said. "All the projects are on schedule and on budget," he added.

With regard to the further expansion of phase-Shah Deniz-3, Cook said, "Since 2007, we have discovered three prospects that we would be interested in exploring in the Shah Deniz contract area."

"We have a team working on reprocessing seismic data across the entire block, looking at potential new reservoirs. It [Shah Deniz-3] is now in the appraisal period, and we would not drill a well before the end of this decade," he said.

Shah Deniz reserves are estimated at 1.2 trillion cubic meters of gas. The cost of the second phase of development at Shah Deniz gas condensate field is estimated at $25 billion.

Within the second phase of development, some 16 billion cubic meters of gas is planned to be produced, six billion of which will be transported to Turkey and ten billion to Europe.

Statoil entered Azerbaijan in 1992, and has a 8.56-percent share in the oil producing Azeri-Chirag-Gunashli (ACG) field, a 15.5 percent share in the Shah Deniz gas field and the corresponding pipelines Baku-Tbilisi-Ceyhan (BTC) and SCP.

Together with its partners in the Shah Deniz consortium in Azerbaijan, Statoil made a final investment decision for the second stage of development at the Shah Deniz gas field in the Caspian Sea on December 17.

The decision triggered plans to expand the South Caucasus Pipeline (SCPX) through Azerbaijan and Georgia, construct the Trans Anatolian Gas Pipeline (TANAP) across Turkey, and construct the Trans Adriatic Pipeline (TAP) across Greece, Albania, and into Italy.

These projects will create a new Southern Gas Corridor to Europe. The total cost of the Shah Deniz Stage 2 and the SCP Expansion projects will be around $28 billion.

Statoil will not participate as an investor in TANAP. It holds a 20 percent share in TAP AG, the owner of TAP, which is developing the pipeline for transporting gas from Turkey to Southern Europe.