More than 10 bcm to more European countries from Azerbaijan

Baku, Azerbaijan, Jan. 13

By Aygun Badalova - Trend:

Three European countries - Italy, Greece and Bulgaria - will start getting gas from Azerbaijan in 2019 in a volume of 10 billion cubic metres (bcm) annually, which will enable them to partly dilute Russia's dominance as a gas supplier.

The supplies of Azerbaijani gas will be provided within the long-term contracts signed last year with nine European companies. These 25-year contracts envisage the purchase of gas from the second phase of Azerbaijani Shah Deniz field development, which will be transported via the Trans Adriatic Pipeline (TAP).

Azerbaijan, however, has far-reaching plans for diversification of its export routes and intends to get access for its gas to the countries beyond TAP's routing. In particular, Azerbaijan considers South-East and Central Europe as a potential market for its gas. Montenegro, Croatia, Bosnia and Herzegovina, as well as Romania, Hungary and Austria are among the countries that in perspective could also get Azerbaijani gas.

The supplies of Azerbaijani gas to the Western Balkans can be provided by the connection of TAP to the Ionian-Adriatic Pipeline (IAP). At the same time new additional transportation route will be needed to deliver gas from Turkish border to the Central European countries.

The question now is what will be the source for such supplies, taking into account that all Shah Deniz-2 gas volumes have already been contracted.

We can answer this question by analyzing the export potential of Azerbaijan.

Azerbaijan's proven gas reserves exceed 2.55 trillion cubic meters. In turn, the anticipated gas reserves of the country are estimated at six trillion cubic meters, The country's export potential will be at least 40-45 billion cubic meters in 2025 after new gas sources are used, according to the head of the State Oil Company of Azerbaijan (SOCAR) Rovnag Abdullayev. At the same time, it is expected that most of the gas will be exported to Europe.

The development of some new fields in Azerbaijani sector of the Caspian Sea, such as Absheron and Umid, as well as Shafag-Asiman, Zafar-Mashal and Nakhchivan prospective structures could create new gas export opportunities for the country.

Discovery of Absheron field was announced in September 2011. The results of the first exploration well indicate the existence of commercially attractive gas and condensate reserves, which are estimated at 300 billion cubic meters of gas and 45 million tons of condensate. The first gas from the field is expected by the end of 2020.

Potential gas reserves of Umid gas field are expected to be more than 200 billion cubic meters.

Babek and Nakhchivan perspective structures are estimated at 400 billion cubic meters and Nakhchivan with 300 billion cubic meters of gas respectively. The total reserves of the three Azerbaijani offshore gas fields Zafar-Mashal, Araz-Alov-Sharq, and Shafag-Asiman are estimated to be as much as 1.5 trillion cubic meters.

Alexander Jackson, the analyst for political risk at Menas Associates in London, focusing on Caspian energy and political issues earlier told Trend that Azerbaijan has plenty of gas over the medium and long term from these fields, which could enable the country to be a source for more than one pipeline to Europe.

So, 10 bcm from the Shah Deniz-2 project could be only the first volumes to be transported from Azerbaijan to Europe, and the infrastructure which will be built for these volumes may also be used for gas from other fields in Azerbaijan.

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