Wood Mackenzie: Azerbaijan to unlock billions more barrels of oil equivalent over future decades
Baku, Azerbaijan, Oct. 14
By Leman Zeynalova – Trend:
There is plenty of life left in Azerbaijan’s energy sector, which dates back all the way to the 1840s, Ashley Sherman, Principal Research Analyst – Caspian & Europe at Wood Mackenzie research and consulting company told Trend.
“This will be underpinned by two of the world’s largest oil and gas projects – Azeri Chirag Guneshli and Shah Deniz – for which the contracts extend to the late 2040s. Ongoing investment, including the potential for new phases, will unlock billions more barrels of oil equivalent over future decades,” he said.
But, according to Sherman, Azerbaijan must compete for investment in new oil and gas projects in a changing global industry.
“It must also adjust to the energy transition and new expectations for when oil demand will peak. This includes the need to accelerate development of renewable energy sources at home for a sustainable energy sector and economy,” he added.
Sherman noted that like other countries in the Caspian region, new oil and gas opportunities in Azerbaijan are often increasingly complex – technically and commercially.
“The easy projects have mostly been done. In Azerbaijan, this means future exploration and production of gas in deepwater areas of the Caspian Sea, from reservoirs at great depth and pressure. BP and SOCAR’s upcoming Shafag-Asiman exploration well is a good example – a very complex well but offering huge resources, if successful, for development in the long term,” he said.
For the oil and gas sector in the land-locked Caspian Sea, two top priorities will be making use of the latest technology and managing costs, according to the analyst.
“In Azerbaijan, this will be essential to justify investment for expanded gas exports to Europe via the Southern Gas Corridor from the late 2020s. Domestic market reforms – including domestic oil and gas prices – would also incentivise investment to meet Azerbaijan’s growing internal consumption,” he concluded.
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