Status of pipeline projects in Azerbaijan as of December 2017

Oil&Gas Materials 6 January 2018 14:20 (UTC +04:00)

Baku, Azerbaijan, Jan. 6

By Maksim Tsurkov – Trend:

Baku-Tbilisi-Ceyhan oil pipeline (BTC)

The BTC transports most of the Azeri Light oil, produced at the Azeri-Chirag-Gunashli offshore field.

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

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 (3.4 percent), Inpex (2.5 percent), CIECO (2.5 percent) and ONGC (2.36 percent).

Project status

According to the State Statistics Committee, the transportation via Baku-Tbilisi-Ceyhan hit 30.86 million tons of oil in January-November 2017 compared to 30.94 million tons in the same period of 2016. Some 78.9 percent of the entire oil transported via the main oil pipelines of the country accounted for the Baku-Tbilisi-Ceyhan pipeline during the period.

The BTC transported 33.93 million tons in 2016 compared to 34.8 million tons in 2015.

Some 5.88 million tons of transit oil (from Turkmenistan) were transported via the BTC in January-November 2017 compared to 4.1 million tons in the same period of 2016.

The BTC transported 4.7 million tons of transit oil in 2016 compared to 5.5 million tons in 2015.

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 tons per year. The pipeline transfers Azeri Light, extracted from the Azeri-Chirag-Gunashli offshore block. Azerbaijan International Operating Company (AIOC) is the operator of the Baku-Supsa pipeline.

Project status

According to BP, the Baku-Supsa pipeline transported 20 million barrels of oil in January-September compared to 23 million barrels in the same period of 2016.

SOCAR exported 2.28 million tons from the Georgian port of Supsa in January-November 2017 compared to 2.21 million tons in January-November 2016.

SOCAR exported 2.38 million tons from the port of Supsa in 2016 compared to 2.79 million tons in 2015.

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 on its own funds. SOCAR also transports crude (extracted from onshore fields) from enterprises and operation companies joint with foreign companies.

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 is 1,147 kilometers. The length of the pipeline in Azerbaijan is 231 km and 916 km in Russia. Its diameter is 720 millimeters and pumping capacity is 120,000 barrels per day.

Project status

SOCAR exported 1.41 million tons of oil via Baku-Novorossiysk in January-November 2017 compared to 1.14 million tons in the same period of 2016. SOCAR exported 1.22 million tons of oil in 2016 compared to 1.27 million tons in 2015.

SOCAR intends to export about 1.5 million tons of oil via the pipeline in 2018.

Baku-Tbilisi-Erzurum (South Caucasus Pipeline)

The length of the Baku-Tbilisi-Erzurum (South Caucasus 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 the gas.

Shah Deniz Stage 2 will provide an extension of the South Caucasus Pipeline. Work on the project is underway, and a number of contracts have been signed within the project.

The share distribution among the agreement parties is as follows: BP (operator) - 28.8 percent, Statoil - 15.5 percent, NICO - 10 percent, Total - 10 percent, Lukoil - 10 percent, TPAO - 9 percent, and SOCAR - 16.7 percent.

Project status

In January-November 2017, the South Caucasus Pipeline (Baku-Tbilisi-Erzurum) transported 6.63 billion cubic meters of gas compared to 6.65 billion cubic meters of gas in the same period of 2016, according to the State Statistics Committee of Azerbaijan.

In 2016, the South Caucasus Pipeline (Baku-Tbilisi-Erzurum) transported 7.15 billion cubic meters of gas compared to 6.65 billion cubic meters of gas in 2015.

As of October 2017, as part of expansion of the South Caucasus Pipeline, which is a part of the Shah Deniz Stage 2, mainline construction continued in Azerbaijan with approximately 419 km of pipe welded and 380 km of backfill complete. All five of the planned horizontal directional drilling activities have also been completed.

In Georgia, mainline construction is complete. Mainline commissioning is approximately 90 percent done.

Hydro-testing of the pipeline is ongoing in both Azerbaijan and Georgia. Six hydro-test sections have been completed on the pipeline in Azerbaijan and 11 hydro-test sections have been completed in Georgia.

Compressor Station 1 construction in Georgia is 100 percent complete with commissioning works approximately 67 percent done. In Compressor Station 2 in Georgia, construction works are approximately 82 percent complete. In the metering station, construction works are 100 percent complete, commissioning works are approximately 87 percent done and the facility is on track to achieve the readiness for introduction of hydrocarbons milestone this year.

Overall, 98 percent of the construction and commissioning scope is already completed.

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 to SOCAR. The list of gas distribution enterprises was then expanded. All these enterprises were earlier liquidated, and seven regional gas enterprises, managed by SOCAR, were formed in their place.

Project status

SOCAR exported about 730 million cubic meters of gas to Georgia in January-September 2017. In 2016, SOCAR exported 1.32 billion cubic meters of gas to Georgia versus 1.36 billion cubic meters in 2015.

SOCAR plans to export 1.866 billion cubic meters of gas to Georgia this year.

Azerbaijan-Iran pipeline

Azerbaijan and Iran are connected by the 1,474-kilometer 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. The pipeline is a branch of the Gazakh-Astara-Iran pipeline commissioned in 1971. Three compressor stations - Gazimammad, Aghdash and Gazakh - were built along it. The pipe's diameter is 1,200 mm.

Project status

In order to use commercial potential of gas storage facilities of Azerbaijan’s state oil company SOCAR, Azerbaijan imports additional volumes of Turkmen gas through Iran at low prices in summer, and in winter, when gas prices are higher, the country exports the purchased gas and receives additional income.

Iran supplies gas to meet the needs of the Nakhchivan Autonomous Republic (NAR), located in the blockade because of the occupation of 20 percent of Azerbaijani lands by Armenia. In 2017, about 280 million cubic meters of gas were supplied from Azerbaijan to Iran for the needs of NAR.

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 until 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

In October 2009, Gazprom Export LLC and SOCAR signed a medium-term contract to deliver gas from Azerbaijan in 2010-2015 through the Shirvanovka point at the Russian-Azerbaijani border. During the period, 5.4 billion cubic meters of Azerbaijani gas were bought.

Gas supplies were suspended in January 2014 and resumed in June 2014. However, in early September 2014, it became known that gas supplies to Russia were suspended again.

In 2015, a subsidiary of Gazprom Export LLC, Gazprom Schweiz AG, carried out deliveries to Azerbaijan Methanol Company (AzMeCo). Under the contract, 107.4 billion cubic meters of gas were delivered.

On Nov. 22, 2017, Gazprom Export LLC and SOCAR agreed on resuming gas deliveries to Azerbaijan. It is planned to deliver 1.6 billion cubic meters of Russian gas to the Azerbaijani market in general.