Status of pipeline projects in Azerbaijan as of December 2014

Baku, Azerbaijan, Dec.26

By Emil Ismayilov - Trend:

Baku-Tbilisi-Ceyhan oil pipeline (BTC)

The BTC transports most of the oil in Azerbaijan, that is Azeri Light oil, produced at the offshore fields of Azeri-Chirag-Guneshli.

The total length of the BТС is 1,768 kilometers, including the 443 kilometer-section running through Azerbaijan, the 249 kilometer-section through Georgia and the 1,076 kilometers through Turkey. The capacity of the pipeline is 1.2 million barrels per day. BTC's construction cost $4 billion.

The shareholders of BTC Co. are BP (30.1 percent), AzBTC (25 percent), Chevron (8.9 percent), Statoil (8.71 percent), TPAO (6.53 percent), Eni (5 percent), Total (5 percent), Itochu (3.40 percent), Inpex (2.5 percent), ConocoPhilips (2.50 percent) and ONGC (2.36 percent).

Project status

According to the State Statistics Committee, the transportation via Baku-Tbilisi-Ceyhan hit 31.5 million metric tons of oil in January-November 2014 compared to 30.1 million metric tons in the same period of 2013. Three quarters of the entire oil transported via the main oil pipelines of the country accounted for the Baku-Tbilisi-Ceyhan pipeline during this period.

The BTC transported 33 million metric tons in 2013 compared to 32.9 million metric tons in 2012. Five million metric tons of transit oil (from Turkmenistan and Kazakhstan) were transported via the BTC in January-November 2014 compared to 2.8 million metric tons in the same period of 2013. Most of oil extracted in Azerbaijan is exported via the BTC. The BTC transported 3.3 million metric tons of transit oil in 2013 compared to 3.1 million metric tons in 2012.

Baku-Supsa oil pipeline

The length of Baku-Supsa is 827 kilometers and its diameter is 530 millimeters. The capacity of the pipeline is over 6 million metric tons per year. The pipeline transfers Azeri Light, extracted from the Azeri-Chirag-Guneshli offshore block headed by BP. Azerbaijan International Operating Company (AIOC) is the operator of the Baku-Supsa pipeline.

Project status

According to BP, the Baku-Supsa pipeline transported 24 million barrels of oil in January-September compared to 22.1 million barrels in the same period of 2013.
SOCAR exported 2.7 million metric tons from the Georgian port of Supsa in January-November 2014 compared to 2.48 million metric tons in January-November 2013. SOCAR exported about 2.73 million metric tons from the port of Supsa in 2013 compared to 2.74 million metric tons in 2012. Oil is being delivered to Supsa via the Baku-Supsa oil pipeline.

Baku-Novorossiysk pipeline

SOCAR's oil is mainly transported via the Baku-Novorossiysk pipeline. It is extracted in the onshore and offshore fields by the company with its own funds. SOCAR also transports raw materials of joint enterprises and operational companies with foreign companies, extracted from the onshore fields.

SOCAR has been an operator of the pipeline since 2008. It was charged with this task by the Azerbaijan International Operating Company (led by BP).

The total length of the Baku- Novorossiysk pipeline composes 1,147 kilometers. The length of the pipeline on the territory of Azerbaijan is 231 km, in the territory of Russia - 916 km, and the diameter is 720 millimeters. The pumping capacity is 120,000 barrels per day.

Project status

SOCAR exported 932,160 metric tons of oil via Baku-Novorossiysk pipeline in January-November 2014 compared to 1.58 million metric tons in the same period of 2013. SOCAR exported 1.75 million metric tons of oil in 2013 compared to about 2.06 million metric tons in 2012.

Earlier, the Russian side decided to terminate the intergovernmental agreement on the supply of oil via the Baku-Novorossiysk pipeline. Nevertheless, it was stated that there was opportunity for further negotiations with the Russian side on the operation of this pipeline, in particular in the opposite direction.

In February 2014, SOCAR and Russian Transneft signed a new agreement for the period of one year on oil transportation via the Baku-Novorossiysk pipeline, in accordance to which, the oil transportation via the Baku-Novorossiysk pipeline was restored.

In 2015, SOCAR intends to export 1.7 million metric tons of oil, which it extracts from onshore and offshore fields of Azerbaijan, versus 1.55 million metric tons, provided for 2014. However, the company has not yet decided on the routes of oil transportation (Baku-Novorossiysk and Baku-Tbilisi-Ceyhan oil pipelines) and the distribution of volumes on them.

In 2014, the volumes were distributed between the Baku-Novorossiysk oil pipeline and the Baku-Tbilisi-Ceyhan oil pipeline. It is projected that by late 2014, SOCAR oil pumping in both directions will account for 1.55 million metric tons, 1.02 million metric tons of which will fall on the Baku-Novorossiysk oil pipeline and 530,000 metric tons on the Baku-Tbilisi-Ceyhan oil pipeline.

Baku-Tbilisi-Erzurum gas pipeline (South Caucasian gas pipeline)

The length of the Baku-Tbilisi-Erzurum (South Caucasian gas pipeline) is more than 700 km. The gas produced from the Shah Deniz field in the Azerbaijani sector of the Caspian Sea is transported via this pipeline. The gas is supplied to Georgia and Turkey. Azerbaijan also acts as the buyer of this gas.

Shah Deniz Stage 2 will provide an extension of the South Caucasus gas pipeline. Work on this project has already begun, and a number of contracts has been signed within the framework of this project.

The share distribution among the agreement parties (after SOCAR's and BP's acquisition of Statoil's share in the project) is as follows: BP (operator) - 28.8 percent, Statoil - 15.5 percent, NICO - 10 percent, Total - 10 percent, Lukoil - 10 percent, TPAO - nine percent, and SOCAR - 16.7 percent.

In 2014, changes occurred in the staff of the shareholders of the South Caucasus gas pipeline. In May, Total sold its share in the project to the Turkish company TPAO, and it was announced in October that the Norwegian Statoil sold a 15.5 percent share in the project to the Malaysian company Petronas. The deal for purchase and sale of shares is not yet complete.

Project status

In January-November 2014, the South Caucasian gas pipeline (Baku-Tbilisi-Erzurum) transported 5.9 billion cubic meters of gas compared to 4.3 billion cubic meters of gas in the same period of 2013, according to the State Statistics Committee of Azerbaijan.

In 2013, the South Caucasian gas pipeline (Baku-Tbilisi-Erzurum) transported 4.7 billion cubic meters of gas compared to 4 billion cubic meters of gas in 2012.

Currently, part of gas from the total daily gas volume is supplied to Turkey, Georgia and to pumping plants of the Baku-Tbilisi-Ceyhan pipeline, and one part is transferred to Azerbaijan from the Sangachal terminal of BP.

Azerbaijan-Georgia pipeline

SOCAR supplies its own gas to Georgia via a pipeline linking the two countries in the Gazakh district of Azerbaijan. The pipeline's capacity is more than 2.5 billion cubic meters of gas per year.

In November 2008, Azerbaijan and Georgia signed an agreement that made it possible to intensify SOCAR's activity in the Georgian gas market over a five year period, starting from 2009. According to the memorandum, SOCAR established a subsidiary, SOCAR Georgia Gas, in order to implement the project. SOCAR Georgia Gas delivers gas to the consumer groups defined by the Georgian government.

On Dec. 26, 2008, SOCAR and Georgia signed an agreement to transfer the control of 30 gas distributing enterprises and gas distributing networks over to SOCAR. The list of gas distribution enterprises was then increased. All these enterprises were earlier liquidated, and seven regional gas enterprises, managed by SOCAR, were formed in their place.

SOCAR will continue supplying gas to Georgia's regions until 2017. The gas supply process will continue as part of a cooperation memorandum signed Dec. 24, 2013 by SOCAR and Georgia. Under the new agreement, SOCAR will further supply gas to 100,000 families in Georgia until 2017.

Project status

SOCAR exported 1.1 billion cubic meters of gas to Georgia in January-November. In 2013, SOCAR exported one billion cubic meters of gas to Georgia versus 993 million cubic meters in 2012.

Azerbaijan-Iran pipeline

Azerbaijan and Iran are connected by the 1,474-kilometer long Astara-Bind-Biand gas pipeline, where 296,5 kilometers fall to Azerbaijan's territory. The pipeline's design capacity was 10 billion cubic meters a year, but now it is lower. This route is a branch of the Gazakh-Astara-Iran pipeline commissioned in 1971. Three compressor stations - Gazi-Magomed, Aghdash and Gazakh - were built on its route. The gas transportation system is designed for an atmospheric pressure of 55. The pipe's diameter is 1,200 mm.

Project status

At present, the gas pipeline supplies about 1.2 million cubic meters of gas, transported through Iran through swaps, to meet the needs of Azerbaijan's Nakhchivan Autonomous Republic, which is under a blockade due to Armenia's occupation of 20 percent of Azerbaijani lands.

Under the contract signed with Iran, 400 million cubic meters of gas are annually exported from Azerbaijan to this country, of which 300 million cubic meters are supplied to Nakhchivan Autonomous Republic for its needs. SOCAR delivered to Iran about 360 million cubic meters of gas in January-November 2014.

Around 400 million cubic meters of gas was delivered from Azerbaijan to Iran in 2012 and 2013 each, in order to meet the demands of Nakhchivan Autonomous Republic.

Commercial supply of Azerbaijani gas is not carried out, however, Iran has repeatedly expressed intention to purchase up to 5 billion cubic meters of gas from Azerbaijan per year.

Azerbaijan-Russia gas pipeline

The Gazimammad - Mozdok gas pipeline has a capacity of up to 5 billion cubic meters of gas per year. Up to 4.5 billion cubic meters of gas from Russia was imported to Azerbaijan through this pipeline till 2007. Azerbaijan refused to import gas in 2008 and started exporting fuel via the Gazimammad - Mozdok gas pipeline from January 2010 in accordance with the contract between SOCAR and Gazprom.

Project status

The contract (with a possibility of extension) for purchase and sale of Azerbaijani gas was signed between SOCAR and Gazprom in Baku on Oct.14, 2009. Gazprom was to receive two billion cubic meters of gas in 2011, and over two billion cubic meters of gas in 2012 in accordance with the contract addendum signed in early September 2010 in Baku.

The additional agreement to double the volume of gas purchased by Russia (from 1.5 to 3 billion cubic meters) was signed by the parties in Sochi on Jan. 24, 2012. Azerbaijani gas supplies to Russia began in January 2010.

SOCAR exported 1.37 billion cubic meters of gas to Russia in 2013. SOCAR exported around 100 million cubic meters of gas to Russia as of H1 of 2014, compared to 876 million cubic meters in H1 of 2013.

The decrease in the export volume is due to the previous repair and recovery work on the gas pipeline stretching from Azerbaijan to Russia. The gas supplies were suspended in January and resumed in June 2014.

However, in early September, it became known that the gas supplies to Russia have been suspended again. This time, the gas export to Russia was suspended in connection with the construction of the remaining section of Baku-Guba-Russian border road, as well as repair work in the gas transport infrastructure itself. It is expected that the supply of Azerbaijani gas to Russia will be resumed in 2015.

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Emil Ismayilov is Trend Agency's staff journalist, follow him on Twitter: @Emilsmail

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