Total names obstacles for Caspian operations
By Gulgiz Dadashova
French Total expects to commence production at Azerbaijan's Absheron gas field in the Caspian Sea in 2021, Total's Planning Development Manager Eric Meyer said at the Oil & Gas Week conference in Baku.
Total launched exploration on the Absheron prospect in 2011.
Total and Azerbaijan’s state energy giant SOCAR formed a joint venture in 2009 to explore and develop the Absheron field with estimated reserves of 350 billion cubic metres (bcm) of gas and 45 tonnes of gas condensate.
Meyer said the project's development program was expected to be ready by mid-2015 and would be submitted to the Azerbaijani government.
He further said the final investment decision is expected to be made in the fourth quarter of 2017, and the first commercial drilling to start in the fourth quarter of 2019. “So the first gas will be produced in the fourth quarter of 2021,” he noted.
The Absheron venture expects to produce 5 bcm of gas per year. Total and SOCAR both hold 40 percent stakes in the venture. French group GDF Suez, which joined the project later, owns 20 percent.
Meyer went on to say that lack of mobile offshore drilling units creates difficulties for work in the Caspian.
He said the company is considering various options to deal with the absence of the rig, naming the difficulty the large vessels face while entering the Caspian waters, making them pass the Volga-Don canal.
All these limits the possibility of participation of more contractors in the market, which ultimately affects the cost of the projects, in particular realized with participation of Total, Meyer said.
Work on the construction of the new generation rig designed for the needs of SOCAR started in 2013. The new rig will be designed for drilling wells at depths up to 8,000 metres and at a water depth of 1,000 metres. The rig is planned to be constructed in 2016.
The cost of the new generation rig construction project in Azerbaijan is $1.116 billion.
The Caspian Drilling Company (CDC) with 92.44 percent of share owned by SOCAR will act as an operator of the drilling rig. Singapore's Keppel FELS Limited became a construction contractor for the plant and signed an agreement on construction with CDC in June 2013.
The new rig will be designed for drilling wells at depths up to 8,000 metres and at a water depth of 1,000 metres. The rig is planned to be constructed in 2016.
In particular, the rig will be used for drilling on prospective structures and fields in Azerbaijan, such as the Umid field and the promising structures Babek, Karabakh, Ashrafi and others.
Azerbaijan must build four new floating drilling rigs taking into account the implementation of big projects in the country.
Speaking about Total’s sale of its 10 percent stake in another major Azerbaijani gas project in the Caspian Shah Deniz 2, Meyer said the main reason for the sale was the unwillingness to remain as a minority shareholder of the project.
In May, 2014 Total sold its 10 percent share in the project to TPAO. After the completion of the transaction, the share of the latter in the project will be 19 percent.
The Shah Deniz field, one of the world's largest gas-condensate fields, was discovered in 1999. Its gas reserves are estimated at 1.2 trillion cubic meters.
He said Total is committed to its operations in Azerbaijan, but because of the unwillingness to remain a minority shareholder the company withdrew from the Shah Deniz project .
"We will focus on the Absheron project. The company is also considering other opportunities in Azerbaijan, which has a bright future,” Meyer said.
Total's strategy is to divest from projects where it has a minority stake and favor those where it is the operator, the company officials reported earlier.
Total has taken a more active approach to managing its business in recent years, buying and selling assets more frequently and focusing on projects for which it can be the operator. The group had sold $13 billion worth of assets by late 2013 under a programme to sell $15-$20 billion total between 2012 and 2014.
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