Japanese companies ready for long-term co-op with Azerbaijan in oil, gas projects

Japanese companies ready for long-term co-op with Azerbaijan in oil, gas projects

Baku, Azerbaijan, Oct. 28

By Maksim Tsurkov - Trend:

The Japanese companies Itochu and İnpex intend to continue cooperation with Azerbaijan within the framework of a project to develop the Azeri-Chirag-Guneshli (ACG) block of oil fields in the Caspian Sea, the Minister of Economic Recovery of Japan Akira Amari said at a meeting with Energy Minister of Azerbaijan Natig Aliyev, the ministry reported Oct. 27.

During the meeting, Aliyev highly appreciated the activities of Itochu and Inpex within the framework of the ACG contract as well as the participation of Mitsui company in the project of development of "Dan Ulduzu-Ashrafi" unit of deposits.

"This cooperation is very important for both sides," the minister said. "By means of loans allocated by the government of Japan, Shimal and Shimal-2 power stations were built in Azerbaijan. In addition, the Japanese companies are involved in the construction of the Star refinery in Turkey. In turn, Japan through the SOCAR Trading company annually imports 240,000 tons of Azerbaijani oil. In the context of ongoing processes of geopolitical and economic crisis in the world, both countries should support each other."

He said that the ACG has large reserves and potential.

"Modern conditions of use of these deposits make it necessary to extend the contract on ACG with existing partners, including Japan," said the minister. "In addition, Azerbaijan till 2032 plans to completely modernize the sphere of oil and gas processing, as well as oil and chemical products through the creation of a new oil and gas processing complex OGPC. Japan can play an important role in the construction of this complex that will meet the latest standards."

In turn, the minister of economic recovery of Japan expressed gratitude to Azerbaijan for the support shown for Itochu Corporation in its successful participation in the ACG project and the Baku-Tbilisi-Ceyhan (BTC) pipeline project for over 20 years.

"The current contract for ACG expires in 2024 and I would like to ask the ministry of energy of Azerbaijan to support Itochu and Inpex companies to continue their activities within the framework of development of the unit, as well as support the Itochu company in its activities within the framework of the OGPC construction," said Amari.

Earlier, the first vice-president of SOCAR company Khoshbakht Yusifzade said that signing of the contract on further development of the ACG between SOCAR and the partners will take place before late 2015.

The contract for development of ACG field was signed in 1994. The proved oil reserves at these fields are estimated at approximately 1 billion metric tons. The shareholders of the project are: BP (operator in the Azeri-Chirag-Guneshli) - 35.78 percent, Chevron - 11.27 percent, Inpex - 10.96 percent, AzACG - 11.65 percent, Statoil - 8.56 percent, Exxon - 8 percent, TPAO - 6.75 percent, Itocu - 4.3 percent and ONGC - 2.72 percent.

Earlier, SOCAR vice president for economic issues Suleyman Gasimov said that the company has offered a number of Japanese companies to take part in the establishment of a new Oil-Gas Processing and Petrochemical Complex (OGPC) in Azerbaijan.

The total cost of the first phase of the OGPC project is estimated at $7 billion (including interest on loans - $8.45 billion). The payback period of the project will last four to five years.
Furthermore, 30 percent of the project will be implemented with the state funds (the funds will be allocated in parts throughout five years), while 70 percent of the project will be implemented with the borrowed funds.

The OGPC will be located 60 kilometers from Baku and will consist of three processing enterprises and a thermal power plant.

The project's implementation will improve the product quality, enhance the export potential of the country and help protect the environment of the capital.

The annual capacity of the refinery within OGPC will be 8.5-9 million metric tons; the gas processing plant - 12 billion cubic meters, petrochemical production - over 1 million metric tons (the capacity of the plant for production of polyethylene will be 800,000 metric tons, polypropylene production unit - 300,000 metric tons).

Edited by CN


Follow the author on Twitter: @MaksimTsurkov

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