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Shah Deniz partners agree to operate Azerbaijani gas sale in Stage 2: interview with StatoilHydro Azerbaijan President

Oil&Gas Materials 6 February 2009 14:42 (UTC +04:00)

Azerbaijan, Baku, Feb. 6/ Trend , V. Sharifov, S. Aliyev/

Azerbaijani gas will be exported under SOCAR's guidance as part of Stage 2 of Shah Deniz field. The Norwegian StatoilHydro is exporting gas from the Shah Deniz field in Stage 1. The company has invested $4.7 billion in Azerbaijani economy from 1992 to 2008.

StatoilHydro is involved in three large projects in Azerbaijan: Azeri-Chiraq-Gunashli (8.5633 percent), Shah Deniz (25.5 percent) and Araz-Alov-Sharq (15 percent).

Trend 's interview with StatoilHydro Azerbaijan President Kristian Hausken.

Trend : StatoilHydro is the operator of the AGSC, selling gas from SD stage 1. How does the company see the marketing of the gas from the Stage 2?

Kristian Hausken: StatoilHydro has successfully marketed gas from Shah Deniz state 1. We are quite actively involved in the commercialization of Stage 2, but marketing this gas involves resolving diverse issues.

Many different parties in and around the region are interested in acquiring Stage 2 gas. Our principle remains the same as for Stage 1: we need to reach commercially sound agreements both in terms of ensuring European prices as a benchmark for the gas, as well as an economically sound transit agreement, no matter which direction the transit may take.

It is very challenging to make any statements about transit routes while dialogue between the governments of Turkey and Azerbaijan regarding transit rights through Turkey remain at an impasse.
Q: How the operatorship function in Stage 2 is going to be decided?

A: With StatoilHydro's full support, the partners have agreed to in principle to sell the gas jointly, under Socar's leadership. Further details have not been finalized.

Q: What volumes of Shah Deniz gas are planned to be sold in 2009?

A: In 2009, we expect to sell 7.7 billion cubic meters of gas from Shah Deniz Stage 1.

Q: What is volume of gas which Turkey is going to buy within the second stage of Shah Deniz?

A: Turkey currently buys 6.3 billion cubic meters of gas from Shah Deniz Stage 1. As there is no clarity as to which direction the gas from Stage 2 will flow to, it is immature to speculate in any future sales to Turkey.

Q: When does the transit agreement with Turkey which calls for gas supply to Europe expected to be signed?

A: The Governments of Azerbaijan and Turkey need to reach a bilateral agreement that would stipulate volumes for Turkey and the terms for transit through Turkey. Only then can any commercial negotiations begin.

Q: In the recent time the issues around European energy security at the expense of alternative gas from the Caspian region have been re-activated. How do you see the future development of Nabucco project? How effectively the Nabucco project can help solve alternative supplies of gas to Europe?

A: We believe that in light of the discussion around diversity of supply, it is important to focus on the right sequence of issues that need to be handled to ensure a viable Southern Gas Corridor in the envisaged future. Transit agreements that reflect the realities of the marketplace need to be in place before decisions are made on the transit vehicles: be it Nabucco, TAP or TGI.

StatoilHydro believes in a staged approach to build the Southern Gas Corridor. In the current environment we firmly believe that a political bilateral agreement between Turkey and Azerbaijan tackling transit as well as security of supply issues to be a precondition for any short to medium term advancement of the Southern Gas Corridor.

StatoilHydro welcomes the resolve of various players in finding solutions for the various transport project options facing producers in the Caspian region. However, none of these transport solutions can be commercially fully explored in absence of the before mentioned bilateral agreement.

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