Gazprom, SOCAR discuss increase of Russian gas supply to Azerbaijan (UPDATE)
Details added (first version posted on 10:39)
Baku, Azerbaijan, Dec. 26
Gazprom (Russian Global Energy Company) and SOCAR (State Oil Company of Azerbaijan Republic) are considering the possibility of increasing the Russian gas supply considering the growth prospective in consumption of natural gas in Azerbaijan, said the message of the Russian gas holding.
The message said that this issue was discussed by the chairman of Gazprom PJSC Alexei Miller and SOCAR president Rovnag Abdullayev during a meeting in Russia's St. Petersburg.
"The meeting participants discussed the current state of bilateral cooperation in gas sphere," said the message. "Special attention was paid to the issue of export of Russian gas to Azerbaijan. In particular, the possibility of increasing supplies taking into account the prospects for growth in natural gas consumption in the country was considered."
The volume of supplies will amount to nearly two billion cubic meters of gas per year (about 10 million cubic meters daily) in accordance with a prior agreement between SOCAR and Gazprom within the framework of the swap operations.
Earlier, head of SOCAR Rovnag Abdullayev said that in the future, this gas will be used for supplying the southern regions of Russia.
"Thus, in 2015 and 2016 we will check the peak capacities of our gas storage facilities," said the head of SOCAR. "Starting from 2017, we will start providing gas supply to the North Caucasus region of Russia."
"Negotiations between SOCAR and Gazprom are currently underway. Now we are working out the technical details of a contract, but it is yet unknown exactly when it [the contract] will be signed," he said.
Abdullayev went on to add that Russia's gas will be supplied through injection into Azerbaijan's underground storage facilities in order to use them at full capacity.
Gas consumption greatly increased in Azerbaijan over the past two years. Abdullayev said earlier that as of now the level of gas supply exceeds 90 percent.
"This causes an increased demand in gas," he added. "Therefore, we redirected the volumes of gas, supplied to Russia, into the domestic market."
"The gas extracted at the Shah Deniz, is contracted for its supply to Georgia and Turkey, and therefore we don't have additional volumes for Gazprom," Abdullayev further said.
"In this regard, a gas swap with Gazprom will allow us to further ensure gas supply to southern regions of Russia, to test out our gas storage facilities, as well as, in case of a consistently high level of injection into them, to reduce the volume of extraction of associated gas at the ACG, and to pump it to the maximum extent to reservoirs to increase oil output at the block," he added.
BP, in 2014, delivered 2.76 billion cubic meters of associated gas to SOCAR compared to 2.19 billion cubic meters delivered in 2013.
The contract for development of ACG field was signed in 1994. The proven oil reserve of the block nears 1 billion tons.
The shareholders in the contract are: BP, operator (28.8 percent), AzSD (10 percent), SGC Upstream (6.7 percent), Petronas (15.5 percent), Lukoil (10 percent), NIOC (10 percent) and TPAO (19 percent).