Azernews.Az

By Aynur Jafarova

The earthwork activities for construction of the Trans-Anatolian (TANAP) gas pipeline will start on April 1, 2015, Head of Azerbaijan's state energy company SOCAR Rovnag Abdullayev said on September 9.

"A ground-breaking ceremony for launching the new gas pipeline is expected to be held in early 2015," Abdullayev told journalists.

TANAP, developed by SOCAR in collaboration with Turkish Botas and the energy company TPAO, will deliver Shah Deniz's gas to the Turkish-Greek border from eastern Turkey.

The initial capacity of the pipeline will be 16 billion cubic meters of gas a year. TANAP will link up with Trans-Adriatic (TAP) pipeline on the Turkish-Greek border.

About six billion cubic meters of gas will be delivered to Turkey and the rest to Europe. The costs of the TANAP project are estimated at $10 billion to $11 billion.

South Caucasus Pipeline

Abdullayev went on to say that the ceremony marking the launch of the South Caucasus (Baku-Tbilisi-Erzurum) Pipeline Expansion project will take place on the 20th anniversary of signing of the 'Contract of the Century' on September 20.

"In fact, this will mark the beginning of the Southern Gas Corridor project," he added.

The South Caucasus (Baku-Tbilisi-Erzurum) Pipeline has been operational since late 2006, transporting gas to Azerbaijan and Georgia, and since July 2007 to Turkey from Shah Deniz Stage 1.

The South Caucasus Co. shareholders are 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).

The gas which will be produced at the second stage of Azerbaijan's Shah Deniz field development will be the main source of Southern Gas Corridor which envisages the transportation of the Caspian gas to European markets.

Azeri-Chirag-Gunashli

SOCAR head also noted keeping the production volumes at a level above 30 million metric tons in the long run is the main goal within the framework of the development of the unit of Azeri-Chirag-Gunashli (ACG) block of oil and gas fields in the Azerbaijani sector of the Caspian Sea.

Abdullayev referred to a slight decrease in production volumes adding that sometimes figures on irrigation and receipt of sand in the well exceed forecast data, which is an unpredictable process.

"However, the situation at the ACG field is constantly monitored and all necessary works are carried out regularly to maintain the stable performance," he added.

He also noted a private program for promising development of the block has been prepared by the company as a mechanism of control over the work of ACG.

"This year, oil production volumes at ACG will exceed the projected levels, and in the next year oil production will remain at the same level," Abdullayev said.

Regarding the development of deep-lying gas on the ACG, the SOCAR head said signing of the contract for this project is not expected yet due to a conflict of interests that arises due to the presence of two different hydrocarbon objects in the same area.

"We are trying to resolve this conflict of interests," Abdullayev said.

The ACG block of fields has been active since 1997. The production started from the Chirag part of the field. It was followed successfully by Azeri Project; Central Azeri production in February 2005, West Azeri in December 2005, and East Azeri in October 2006.

The Deepwater Gunashli section launched production in April 2008.

ACG participating interests are BP (operator - 35.8 percent), SOCAR (11.6 percent), Chevron (11.3 percent), INPEX (11 percent), Statoil (8.6 percent), ExxonMobil (8 percent), TPAO (6.8 percent), ITOCHU (4.3 percent), ONGC Videsh Limited (OVL) (2.7 percent).

DESFA

Referring to the deal on purchasing stake in DESFA, the Greek national operator of gas distribution network, Abdullayev said SOCAR is expected to complete the deal by late September.

He noted currently the deal is being approved by the relevant bodies of the EU, and the process is expected to be completed later this month.

In late 2013, SOCAR signed agreements with the Hellenic Republic Assets Development Fund (HRADF) and the Petroleum Company to acquire 66 percent share of DESFA.

Following an international tender announced earlier by HRADF, the parties signed an agreement on the sale of shares and shareholders agreement.

The signed documents will come into force following their approval by the European Commission Directorate General for Energy and Antitrust Policy.

Gas supplies to Russia

Abdullayev also spoke about the gas export to neighboring Russia. He said gas export to Russia is not a goal for SOCAR.

Earlier SOCAR stopped gas supplies to Russia due to work on the construction of the remaining section of the Baku-Guba-Russian border road and maintenance work on the gas transport infrastructure.

Abdullayev said the contract between SOCAR and the Russian Gazprom allows suspending and resuming of gas supply at any time.

"Gas transmission and distribution systems of the country require reconstruction and renewal operations. The same operations must be carried out in the northern regions of Azerbaijan as well. The volumes of gas injection into underground storage facilities of the country were also increased and gas supplies to Georgia are being provided in view of the growing demand," the SOCAR head said.

"Right now, our main goal is to complete the repairing process of the gas transmission systems and transmission pipelines, so that there would be no problems with the supply of gas in winter. Gas supply in Russia will also be provided as soon as possible," Abdullayev said.

SOCAR exported about 100 million cubic meters of gas to Russia in the first half of 2014. This figure was 876 million cubic meters in the same period of 2013.

Azerbaijani gas is supplied to Russia on the basis of a contract on the purchase and sale of Azerbaijani gas with a possibility of extension. The deal was signed between SOCAR and Gazprom in Baku on October 14, 2009.

The decline in export volumes is connected with the previous repair on the gas pipeline stretching from Azerbaijan to Russia. Gas supplies were suspended in January and restored in June 2014.

Gazprom was to receive two billion cubic meters of gas in 2011 and over two billion cubic meters in 2012, in accordance with a 2010 supplement to the contract. However, the Russian side did not get the full amount of the planned volume as of 2012.

The additional agreement to double the volume of Azerbaijani gas purchased by Russia, from 1.5 billion cubic meters to 3 billion cubic meters, was signed by both sides in Sochi on January 24, 2012.