By Leman Mammadova
Since gaining independence, Azerbaijan, a country rich in hydrocarbon reserves, has been attracting many world famous oil and gas companies.
Foreign contractors have invested over $80 billion in the oil and gas sector of Azerbaijan since 1995, Rovnag Abdullayev, President of Azerbaijan’s State Oil Company (SOCAR), said in an article published in "Azerbaijan" newspaper.
He noted that SOCAR has signed 19 PSA (production sharing agreement) contracts with 24 companies from 15 countries and two risk service agreements.
Abdullayev also stressed that Azerbaijan’s energy security is fully ensured. At the same time, Azerbaijan has become an integral part of the system for ensuring energy security of neighboring countries, in particular, Georgia and Turkey, he noted.
“The South Caucasus Pipeline was built for the transportation of gas in the first stage of the Shah Deniz field, and it was expanded as part of the second phase. So far, about 40 billion cubic meters of gas have been delivered via this pipeline, both domestically and to Georgia and Turkey,” said Abdullayev.
As of today, the contract for the development of the Azeri-Chirag-Gunashli field block (ACG) and the contract for the development of the Shah Deniz offshore field are the biggest oil and gas contracts in Azerbaijan.
ACG is the largest oil and gas field in the Caspian Sea, covering more than 432 square kilometers. A contract for the development of ACG block of oil and gas fields was signed in 1994 for 30 years. Oil extraction from the field began in November 1997. The new agreement signed in 2017 provides for the development of the field until 2050.
More than $36 billion have been invested into the development of ACG since the original PSA was signed in 1994.
Proven oil reserves of ACG block of oil and gas fields are estimated at 1.2 billion tons, while gas reserves make up 350 billion cubic meters.
ACG participating interests are as follows: BP - 30.37 percent; AzACG (SOCAR) - 25 percent; Chevron - 9.57 percent; INPEX - 9.31 percent; Equinor - 7.27 percent; ExxonMobil - 6.79 percent; TPAO - 5.73 percent; ITOCHU - 3.65 percent; ONGC Videsh Limited (OVL) - 2.31 percent.
Shah Deniz is a giant gas condensate field, reserves of which are estimated at 1.2 trillion cubic meters of gas and 240 million tons of condensates. Within the second stage of field development, the volume of gas production can be increased to 24 billion cubic meters per year, according to forecasts.
Gas produced within Shah Deniz Stage 2 will be transported from the Caspian Sea to Europe, through Italy, Georgia, Turkey, Greece, Bulgaria, Albania and the seabed of the Adriatic Sea. Total gas production in the Shah Deniz field is 100 billion cubic meters.
The agreement on the exploration, development and shared production of promising areas of Shah Deniz was signed on June 4, 1996. The agreement on the division of production was ratified on October 17, 1996.
The project participants are BP (operator - 28.8 percent), AzSD (10 percent), SGC Upstream (6.7 percent), Petronas (15.5 percent), LUKOIL (10 percent), NIKO (10 percent) and TPAO (19 percent).
Leman Mammadova is AzerNews’ staff journalist, follow her on Twitter: @leman_888
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