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Weekly digest of Azerbaijan’s energy sector

Oil&Gas Materials 7 September 2020 16:35
Weekly digest of Azerbaijan’s energy sector

BAKU, Azerbaijan, Sept.7

By Leman Zeynalova – Trend:

SOCAR is not considering purchase of Israeli oil refinery

The State Oil Company of Azerbaijan (SOCAR) is not considering the purchase of the Ashdod oil refinery, the company told Trend.

"We have received such a proposal, but SOCAR is not currently considering investing in this project," the company said.

Israeli Calcalist newspaper and website earlier reported that SOCAR is interested in buying Israeli Ashdod oil refinery which has been put on sale.

"SOCAR is holding talks with some Israeli companies, as it needs a local partner for the purchase," the report said.

BP publishes draft ESIA for Shallow Water Absheron Peninsula project

BP as the operator of the Shallow Water Absheron Peninsula (SWAP) project announces that a draft Environmental and Social Impact Assessment (ESIA) document has been produced for planned 3D seismic data acquisition as part of BP’s work obligation and is available for public review and comment.

It is proposed to commence drilling of first well at SWAP in Q1 2021

It is proposed to commence drilling of the NKX01 exploration well at the Shallow Water Absheron Peninsula (SWAP) in Q1 2021, and drilling activities are expected to take up to 90 days to complete, with the possibility of a further 30 days to complete sidetrack well, if required, Trend reports citing BP.

The SWAP Contract Area comprises three Prospective Areas. It is planned to drill three SWAP exploration wells in total; one in each Prospective Area namely:

North Khali (NKX01) exploration well in North East Prospective Area;

Qarabatdag (QBDX01) exploration well in South East Prospective Area;

Bibiheybat (BHEX01) exploration well in West Prospective Area;

“The base case assumes that drilling activities will commence in January 2021 however, for contingency, should there be any delay for logistical or operational reasons, and based on prior experience and best estimates, a delay of up to 2 months may occur. The key objective of drilling the exploration well is to confirm the potential presence of hydrocarbon resources at the North East Prospective Area for future field development,” said the company in its draft ESIA for the project.

“The well will be drilled using a jack-up rig, which will be positioned at the well location using three tug vessels. The well will be drilled using drilling muds (using water based mud for the conductor section and non-water based muds for the lower hole sections) with all mud and cuttings recovered to the jackup rig and handled as waste. It is assumed the jack-up rig will be lit at night and operate 24 hours a day over the drilling programme. Preference will be given to source equipment and materials which meet the required Project specifications from Azerbaijan wherever possible. All supplies required during the drilling of the well will be transported from the existing BP Supply Base with drilling fluids provided from the Advanced Fluids Facilities (AFF).”

BP announces schedule for drilling exploration wells for SWAP

It is planned to drill three exploration wells in total as part of the Shallow Water Absheron Peninsula (SWAP) ; one in each Prospective Area namely: North Khali (NKX01) exploration well in North East Prospective Area; Qarabatdag (QBDX01) exploration well in South East Prospective Area; Bibiheybat (BHEX01) exploration well in West Prospective Area, Trend reports citing BP.

“The NKX01 exploration well is located within the North East Prospective Area, approximately 15km from the Azerbaijani mainland in a water depth of approximately 22m. It is proposed to commence drilling of the Project exploration well in Q1 2021. This will be followed by drilling at the second well location (BHEX01) in Q2 2021 and drilling of the third well (QBDX01) is planned to commence in Q4 2021,” the company said in its draft ESIA for the project.

The NKX01 exploration well is planned to target hydrocarbons approximately 2,500m below the seabed surface and drilling activities are expected to take up to 90 days to complete. During this period, assistance to the drilling rig will be provided by support vessels.

GHG emissions into atmosphere from SWAP drilling program

The total volume of greenhouse gas emissions (GHG) into the atmosphere from the Shallow Water Absheron Peninsula (SWAP) project of BP in Azerbaijan is estimated at 24,000 tons, Trend reports citing BP.

SOCAR Capital plans new bond issue by late 2020

SOCAR Capital, a SOCAR group company of Azerbaijan, plans new bond issue by late 2020, the company told Trend.

“SOCAR bonds enjoyed great interest among the population and this high demand also affected the prices. Both legal entities and individuals have high demand for new bonds. For this reason, we plan to issue bonds by the end of 2020. The value, price and interest rate of the bonds will be announced later,” said SOCAR Capital.

The company said that the first emission was in US dollars. “The new bonds we are going to issue this year will be in US dollars either, as we want to offer a fully guaranteed and liquid investment tool for the citizens who convert their money into dollars and keep it passively outside the economy.

“SOCAR bonds are traded at Baku Stock Exchange. SOCAR Bonds can be obtained from SOCAR Bonds kiosks in ASAN Service Centers #1 and #5, as well as by applying to investment companies operating in Azerbaijan. In 2016, SOCAR issued $ 100 million worth of bonds to the domestic market with a face value of $ 1,000 each. The secondary market operations of SOCAR Bonds issued for a period of 5 years will last until October 17, 2021,” said the company.

SOCAR Capital reveals total revenues of its bondholders

Circulating bonds of SOCAR Capital have been traded on the Baku Stock Exchange by investors for about four years, the company told Trend.

“In addition to the quarterly interest payments by SOCAR, investors can get income by selling their bonds at a higher price. Interest payments were made three times this year and $ 4.75 million was transferred to investors' accounts. To date, the total income of bondholders amounted to $ 18.75 million,” said SOCAR Capital.

“Proceeds from the bonds are primarily used to repurchase $ 1.75 billion worth of Eurobonds issued abroad. By issuing bonds, we first prevent the payment of millions of dollars of interest abroad every year, which is paid to our citizens instead of bringing income to foreigners, and the currency remains in our country. Secondly, SOCAR's own interest expenses are reduced and we use our funds more efficiently. And third, when the bonds were issued, our citizens converted about 80 percent of their money into dollars and kept them passively in homes and safes. This money did not bring income to the economy or its owners. The issuance of SOCAR bonds allowed to attract the money that is left out of the economy and does not benefit its owners to the active economy,” said the company.

SOCAR exports AI-92 gasoline for first time after several years of break

Azerbaijan’s state oil company SOCAR has exported around 64,000 tons of AI-92 gasoline for the first time after several years of break, Ibrahim Ahmadov, deputy head of the public relations and events department at SOCAR told Trend.

Ahmadov noted that the jet fuel production in Azerbaijan dropped by around 20 percent in the first seven months of 2020, as compared to the same period of 2019. “During the period of COVID-19 pandemic , from March 1 through July 31, the demand for jet fuel shrank by 20 percent, while the export decreased by 40 percent.”

SOCAR: AI-92 gasoline to cover domestic demand during Baku Refinery repair

AI-92 gasoline reserves should be enough to cover the domestic demand in Azerbaijan during the planned repair of the Heydar Aliyev Oil Refinery, Ibrahim Ahmadov, deputy head of the public relations and events department at SOCAR told Trend.

“Despite the damage caused by the pandemic, SOCAR took benefit from this situation. As a result of the lockdown in the country in March and April 2020, the fuel consumption dropped significantly, which enabled us to accumulate considerable reserves for the period of shut down of the refinery and to export the surplus volumes. The forecasts for consumption give ground to say that the AI-92 gasoline reserves should be enough to cover the domestic consumption in Azerbaijan during the planned repair of the Baku refinery, which will likely prevent its import this year,” he said.

SOCAR: Temporary shutdown of Baku Refinery may last up to 1.5 month

Temporary shutdown of Heydar Aliyev Oil Refinery in Baku may last up to 1.5 month, Ibrahim Ahmadov, deputy head of the public relations and events department at SOCAR told Trend.

“Baku Refinery was shut down for the planned repair on Aug.27. During this period, some work will be carried out on the installations as part of the plant modernization project. Thus, the temporary shutdown of the refinery may last up to 1.5 months. Since it began later than the scheduled repairs at Azerikimya production union, both plants are planned to be launched almost simultaneously,” he said.

Ahmadov noted the the maintenance repair at the Baku Refinery is held every year.

“Azerikimya production union receives raw materials from the Baku Refinery and there can be some break in supplies to Azerikimya during the planned repair. Therefore, usually, planned repair at both plants is held simultaneously. The shutdown usually lasts nearly a month,” he said.

Ahmadov noted that sometimes, the temporary shutdown lasts one and a half month, since the existing equipment at both plants is modernized and new installations are built.

Turkish BOTAS discloses volume of oil shipment from Ceyhan terminal

Turkish BOTAS International Limited (BIL) has to date shipped nearly 3.507 billion barrels of oil from Ceyhan oil terminal, Trend reports referring to BIL.

The BIL data shows that 4,573 tankers with oil from Azeri-Chirag-Gunashli (ACG) block of fields have been loaded from the terminal to date.

Some 192 tankers with ACG oil (around 146.77 million barrels of oil) were shipped from the Ceyhan oil terminal since the beginning of 2020.

Moldova may get access to Azerbaijani gas

Moldova may get access to Azerbaijani gas via the Trans Adriatic Pipeline (TAP) project by connecting to it through the Ungheni-Chisinau gas pipeline, according to Alain Pilloux, European Bank for Reconstruction and Development Vice President, Trend reports

“This connection will enhance Moldova's energy security by diversifying its gas supply sources, a prerequisite for the country's successful development. The project also helps integrate Moldova into future major gas infrastructure projects such as the Trans Adriatic Pipeline and gas sources from central European hubs, and links it with Black Sea gas deposits. Greater integration will deliver economic benefits for consumers,” said Pilloux.

SOCAR reveals volume of investments in Georgia

Azerbaijan’s state oil company SOCAR has invested more than $1.1 billion in Georgia’s economy from 2007 through 2019, Trend reports with reference to SOCAR.

SOCAR entered Georgian market in 2006 and has been investing in this country’s energy sector since then.

Currently, SOCAR Georgia Energy, SOCAR Georgia Petroleum, SOCAR Georgia Gas, SOCAR Georgia Security and Kulevi oil terminal successfully operate in Georgia. These companies have paid $1.5 billion worth taxes to Georgia’s state budget over 12 years. SOCAR is the biggest taxpayer of Georgia.

SOCAR’s 2D, 3D seismic exploration work in 2019

Geophysical, engineering and geological works were carried out by the Department of Geophysics and Geology of Azerbaijan’s state oil company SOCAR and Caspian Geo LLC in 2019 in offshore and onshore areas, Trend reports citing the company.

3D seismic exploration works:

- Baku archipelago oil-and gas-bearing region. Executor – Exploration and Geophysics production division. Client - Azneft production union;

- East Absheron oil-and gas-bearing region;

- Ashrafi-Dan Ulduzu-Aypara contract area. Executor – Caspian Geo LLC. Client – Equinor

2D seismic exploration works:

- Lokbatan-Puta-Qushkhana area of Absheron oil-and gas-bearing region. Executor – Exploration and Geophysics production division. Client - Azneft production union;

- Dubandi area of Absheron peninsula;

- Duvanni. Client - BP Exploration;

- Ashrafi-Dan Ulduzu-Aypara contract area. Executor – Caspian Geo LLC. Client – Equinor

Exploration drilling by SOCAR in 2019

Azerbaijan’s state oil company SOCAR has conducted exploration drilling on a total area of 10,537 meters jointly with its foreign partners in 2019, Trend reports citing the company.

SOCAR has conducted exploration drilling at Bulla Deniz field at the exploration well #91, Gunashli field, exploration and development well #38 and Absheron field, ABD 001 appraisal well jointly with Total E&P Absheron B.V.

The geological structure and oil and gas prospects of the fields were studied as a result of exploration drilling in 2019.

SOCAR: Prime cost of oil & gas output up

The prime cost of oil production by Azerbaijan’s state oil company SOCAR stood at 123.82 Azerbaijani manat per ton in 2019, or 4.9 percent higher than in 2018, Trend reports with reference to the company.

The cost of oil production by SOCAR included material and component costs with 3.9 percent share , salary - 15.3 percent, social needs - 2.9 percent, depreciation allowances - 17.7 percent, repair costs - 11.6 percent, maintenance costs - 5, 2 percent, transportation costs - 16.9 percent, mining tax - 8.2 percent and other costs.

This is while the prime cost of gas output by SOCAR amounted to 61.89 manat per 1,000 cubic meters, or 7.4 percent higher than in 2018.

Higher prime cost for gas production is due to the increase in material costs, electricity costs, salaries, fixed assets maintenance costs, security costs, other taxes and other services.

Higher oil output ensured at Azerbaijan’s West Absheron field

Higher oil output has been ensured at Azerbaijan’s West Absheron field with repair of the existing facilities and construction of new ones, Trend reports with reference to the Azerbaijan’s state oil company SOCAR.

Four wells were drilled at the platform #54, however, the lack of the filtration equipment made the well completion impossible.

This is while the wells #139 and #72 were drilled, completed and put into operation. Construction work was completed on the platform #10 and nine wells were drilled and put into operation. Drilling at the field continues.

Annual complex audit conducted at SOCAR’s Kulevi terminal port facility

An annual complex audit was conducted at Kulevi oil terminal port facility of Azerbaijan’ s state oil company SOCAR in August, Trend reports with reference to the terminal’s website.

Reportedly, the audit was conducted according to the approved yearly plan by the Audit Team of Maritime Transport Agency of Georgia. The main purpose of the visit was:

1) to observe the level of Security/Safety at terminal port facility;

2) evaluation of compliance of company processes with the requirements of applied international standards as ISO 9001, ISO 14001 and ISO 45001;

3) discuss the recommendations from last audit;

4) finding opportunities for improving and give additional recommendations for strengthen the system and etc.

SOCAR’s Azneft increases oil output with geological work

Azneft production union of Azerbaijan’s state oil company SOCAR conducted 677 geological works throughout 2019, thereby extracting 352,800 tons of additional oil, Trend reports with reference to SOCAR.

Azneft conducted 254 geological works at offshore fields, which enabled it to produce 306,000 tons of additional oil, while the number of geological works at onshore fields stood at 423, achieving 46,800 tons of additional oil output.

Around 140,600 meters of development drilling was conducted at the fields developed by Azneft, 77 wells, including 12 gas injection wells were put into operation and these fields produced 253,600 tons of oil and 29.7 million cubic meters of gas.

About 26 new wells drilled at onshore fields produced 11,500 tons of oil, while 50 new wells drilled at offshore fields produced 242,100 tons of oil.

Drilling works conducted at Azerbaijan’s gas storages

As many as 12 wells were drilled at Garadagh and Galmaz gas storages in Azerbaijan in 2019, Trend reports with reference to Azerbaijan’s state oil company SOCAR.

Reportedly, 8 of those wells were used for gas injection.

The volume of drilling works at Garadagh underground gas storage stood at 16,940 meters and five gas injection wells were drilled and put into operation.

This is while the volume of drilling at Galmaz underground gas storage equaled to 13,668 meters and seven wells were drilled and put into operation.

Gas injection into Galmaz and Garadagh storages stood at 984.9 million cubic meters and 1.281 billion cubic meters, respectively.

Gas injection into storages in Azerbaijan this year began in March.

The volume of gas in storages at the beginning of injection stood at 1.253 billion cubic meters.

“To date, 1.632 billion cubic meters of gas has been injected into storages. The volume of gas in storages stands at 2.885 billion cubic meters as of August 1, 2020.

SOCAR exceeds forecast volume of crude oil refining

Azerbaijan’s state oil company SOCAR refined 6,189,720 tons of crude oil in 2019, as compared to the forecasted volume of 6,102,000 tons, Trend reports citing the company.

This is while in 2018, this figure stood at 6,095,750 tons.

SOCAR produced 1,161,400 tons of gasoline, 591,100 tons of jet fuel, 2,080,200 tons of diesel, 197,900 tons of liquefied gases, 260,100 tons of bitumen, 22,900 tons of lubricants, 238,400 tons of coke and other products from the refined oil in 2019. The oil refining depth was 93.6 percent.

Gas processing by SOCAR stood at 3.215 billion cubic meters in 2019, as compared to the forecasted level of 3.520 billion cubic meters. The company’s gas processing in 2018 equaled to 2.952 billion cubic meters.

SOCAR produced 3.161 billion cubic meters of purified natural gas, 12,030 tons of technical butane and 20,030 tons of gasoline produced from gas. The entire volume of gasoline produced from gas went to Azneft production union as a raw material for recycling, 3.5 percent of technical butane went to Azerkimya production union as raw material and 96.5 percent was sold on the domestic market.

SOCAR fulfills capital investment plan by more than 50%

Azerbaijan’s state oil company SOCAR fulfilled the capital investment plan by 51.4 percent in 2019, Trend reports citing the company.

SOCAR’s planned capital investment amounted to 3,268,449,100 manat, including 728,684,800 for drilling, 2,268,452,000 for construction, 231,312,300 manat for non-installed equipment and 40,000,000 manat for geological exploration.

In fact, SOCAR’s capital investment in 2019 stood at 1,678,493,600 manat, including 686,009,900 manat for drilling, 856,713,300 for construction, 90,681,900 manat for non-installed equipment and 45,088,500 manat for geological exploration.

Test gas supplies from Azerbaijan to Europe via TANAP start: Turkish media

Test gas supplies from Azerbaijan’s Shah Deniz 2 to Europe have started via the Trans Anatolian Natural Gas Pipeline (TANAP), Trend reports citing Turkish media.

Gas will be supplied across the Adriatic Sea to Italy via the Trans Adriatic Pipeline (TAP), which connects to TANAP on the Turkish Greek border.

Sources noted that TAP has been filled with gas for pipeline testing and for the stock. They also noted that TAP will be fully operational in the first quarter of 2021.

Gas production from Azerbaijan’s Umid-2 postponed to 2022

Taking into account the current status of Umid-2 project (platform of Umid gas field) in Azerbaijan, the start of gas production has been postponed from the third quarter of 2021 to the third quarter of 2022, Trend reports citing Azerbaijan’s state oil company SOCAR.

In order to prevent delays in overall production from the field, it is planned to accelerate the production from Umid-1 platform by constructing a main gas line from Umid-1 platform directly to Dashgil terminal in the first quarter of 2021.

After starting the output from Umid-2 platform, it will be connected to the main gas line across the bottom of the sea.

As a result of these measures, the total production from the northern part of Umid field is expected to be 51 billion cubic meters of gas and 5.3 million tons or 41 million barrels of condensate.

SOCAR updates on works at Babek perspective structure

Engineering, geological and geotechnical studies were conducted at the shallow water Babek structure in Azerbaijan in order to carry out exploration works there, Trend reports citing Azerbaijan’s state oil company SOCAR.

The studies were carried out at a sea depth of 62 meters.

It is planned to drill the BX-01 exploration well by 2021 using the Satti drilling rig of the Caspian Drilling Company by installing an unmanned wellhead platform.

Currently detailed engineering work is underway for the platform and at the same time, the process of purchasing long-term equipment continues.

If the tests conducted at the seventh horizon of the productive layer are positive, field trial will start in the shallow water Babek structure.

Babek structure has 400 billion cubic meters of gas and 80 million tons of condensate reserves, according to the preliminary estimates.

SOCAR eyes to increase volume of active gas in underground storages

Azerbaijan’s state oil company SOCAR intends to increase the volume of active gas in underground gas storages, Trend reports citing Azerbaijan’s state oil company SOCAR.

To this end, the company has some plans regarding the Garadagh and Galmaz underground gas storages.

It is planned drill six wells in the third horizon of the productive layer at the third block of Galmaz field, to hand over the fourth block operated by the Oil and Gas Extraction Department named after Ali Amirov to the underground storage and to drill 15 wells at this block. Moreover, plans are to drill 20 wells at Gadadagh field. The total number of the wells to be drilled at the two underground gas storages is 41.

Moreover, the company planned to build Galmaz gas compressor station and a new Garadagh gas compressor station.

For this purpose, 10 and 11 wells have been drilled at Galmaz and Garadagh fields, while one more well at Garadagh field is being drilled.

The construction of a new compressor station on Galmaz area was completed in 2019, while the Garadag compressor station is expected to be constructed and put into operation in 2021.

SOCAR gearing up for Industry 4.0

Azerbaijan’s state oil company SOCAR is gearing up for Industry 4.0, as the company is digitalizing processes in all areas of activity, Trend reports.

SOCAR has also established the Caspian Innovation Center for this purpose.

One of the projects implemented by SOCAR in the field of digitalization is "Aliya", the first artificial intelligence platform in Azerbaijan’s oil industry.

“Aliya” analyzes the final data of the drilled wells and forecasts the design, risk and key performance indicators of the wells to be drilled in the future.

“Aliya” also predicts the costs of the planned well, timing, existing and anticipated risks, their impact, and conceptual design.

This process takes only a few seconds, while drilling experts used to spend 1-2 months on it.

SOCAR has worked out SAP PS for Drilling project to manage drilling processes from a single center, as well as SAP UFAM project to control and manage all processes in the field of production. Thus, a digital twin is created to ensure the field development.

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