Will TOTAL-Azerbaijan co-op in renewable energy affect gas projects?

14 February 2019 15:19 (UTC+04:00)

By Leman Mammadova

The cooperation between Azerbaijan and France’s TOTAL company in the sphere of renewable energy will not compete with the company’s gas projects, a source in the country’s oil and gas market told Trend.

The source was talking about the memorandum of understanding (MoU) earlier signed between Azerbaijan’s Energy Ministry and TOTAL Eren signed for the development of renewable energy sources.

"The document has identified some prospects. We technically assessed some of them and are ready to materialize projects. MoU is a first step before working on these specific projects. As there is yet no detailed legal framework in Azerbaijan, a pre-requisite to any project with international investors is to agree a framework with MoU," noted the source.

TOTAL believes that there is a good potential for renewable energy in Azerbaijan especially in wind farms, according to the source.

"TOTAL’s strategy at group level is to develop renewable energy targeting 30 percent of its energy mix in 2040. Then it will have some resources to develop projects in Azerbaijan," said the source.

The source noted that these projects would complement rather than compete with gas projects.

"TOTAL strategy fits with the "2 Degrees" scenario of the International Energy Agency which considers a growth of gas production and consumption and renewable energy. Developing in parallel gas and renewable makes sense in Azerbaijan and in other countries," the source concluded.

TOTAL, which is a global energy producer and provider, a major player in low-carbon energies, operates in more than 130 countries worldwide. Total has been developing a long-term partnership with Azerbaijan since 1996, mainly focusing on exploring and producing oil and gas.

TOTAL has a 50 percent interest in the Absheron production sharing agreement in the Caspian Sea, also holds a 5 percent share in the Baku-Tbilisi-Ceyhan (BTC) oil pipeline.

TOTAL sells gas to SOCAR, Azerbaijan's national oil company and markets petrochemicals, automotive and industrial lubricants in Azerbaijan, while buys crude oil, especially from SOCAR.

As of September 2017, the TOTAL invested 237.5 million euros in EREN Renewable Energy which was then renamed Total Eren.

TOTAL Eren specialized particularly in the development, financing and operation of wind and photovoltaic stations.

On February 5, Azerbaijani Energy Ministry and TOTAL Eren have signed a memorandum of understanding for the development of renewable envisaging cooperation in assessment of potential and creation of conditions for investment in renewable energy projects in Azerbaijan.

The signing of the Memorandum with TOTAL will contribute to the work to increase the share of renewable energy in the total electricity generation.

The favorable geographic location and climatic conditions allow the widespread use of environmentally friendly alternative energy sources in Azerbaijan.

The capacity of the energy system of Azerbaijan is more than 6,000 megawatts. At the same time, according to experts, the potential of renewable energy sources in Azerbaijan exceeds 25,300 megawatts, which will allow generating 62.8 billion kilowatt hours of electricity annually.

At present, 18 percent of electricity production in Azerbaijan fell on alternative energy sources, in which hydroelectric power stations hold main share, although most of the country's potential in this area falls on solar energy (estimated at 5,000 megawatts).

Some 4,500 megawatts accounts for wind power, 1,500 megawatts -- for biomass, 800 megawatts -- for geothermal energy, and the remaining 350 megawatts -- for the small hydro power plants.

Azerbaijan implements a number of measures for further development of alternative energy sector. To this end, negotiations are underway with foreign companies and investors, including companies from China, the UAE, the US and the EU.

The commissioning of 420 MW of wind, solar and bioenergy generating capacities is planned in accordance with the Strategic Roadmap for the development of public services in Azerbaijan. For this purpose, a legislative base is being created, mechanisms for attracting fair investments are being determined, and cooperation with international energy companies and financial organizations with advanced experience in this field is developing.

Azerbaijan is planning to introduce the new draft law on alternative energy sources by May 2019. In this context, the Norwegian DNV GL will help create a support system and a legal framework in Azerbaijan's alternative energy sector.

The Azerbaijani government is planning to increase the share of alternative energy by 30 percent by 2030 in total power generation.

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Leman Mammadova is AzerNews’ staff journalist, follow her on Twitter: @leman_888

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