BAKU, Azerbaijan, Oct.26
By Leman Zeynalova – Trend:
The highlight of Azerbaijan’s latest energy week was the signing of a new multi-million dollar contract for the Azeri-Chirag-Gunashli (ACG) block of oil fields with the US-based Emerson company.
Emerson was awarded a $14 million contract to provide automation technologies for the new Azeri Central East offshore platform in the Caspian Sea, the latest development in the Azeri-Chirag-Deepwater Gunashli oilfield.
Emerson will serve as the main automation contractor, providing its Project Certainty methodologies and digital technologies that transform capital project execution to help BP bring this fast-track project onstream in 2023.
Azerbaijan’s state oil company SOCAR last week appeared in some headlines with its operation in Ukraine, Georgia and Turkey.
SOCAR has launched new projects for gas supply in Georgian regions. SOCAR Georgia Gas, a subsidiary of SOCAR, plans to build a gas distribution line in Ilmazli village of Georgia’s Kvemo Kartli region. With total length of 13,145 meters, the gas distribution line will provide 227 more users with natural gas. The project is financed by SOCAR.
SOCAR Georgia Gas plans to complete the construction of a gas distribution network covering a total of 15 settlements in Georgia’s Kvemo-Kartli and Mtskheta-Mtianeti region by the end of 2020. The129-km network will supply 2,483 more potential users with gas.
Additionally, the company is constructing 7.3 kilometers long gas pipelines in seven more villages in Marneuli district. The pipelines, which will supply gas to 1,111 users, is expected to be built by late 2020.
SOCAR is also going to supply two more villages with gas in Dmanisi district this year.
Bursagas, subsidiary of SOCAR Turkey, has started gas supplies to Uludag, one of the major winter tourism destinations in Turkey.
The 16 million Turkish liras worth project was completed in a year. Around 21 kilometers of steel and nine kilometers of polyethylene lines were laid as part of the project.
SOCAR increased the liquified petroleum gas (LPG) exports to Ukraine in the first three quarters of 2020 by 1,600 tons or 3.73 percent as compared to the same period of 2019.
SOCAR delivered 43,900 tons of LPG to Ukraine over the third quarter of 2020, as compared to 42,300 tons in the same period of 2019.
SOCAR Energy Ukraine entered the top of gasoline importers to Ukraine in September 2020. The top 10 largest importers included SOCAR Energy Ukraine (5,900 tons), Glusko Ukraine (4,700 tons), KLO (2,200 tons), Vsesvit (2,200 tons) and Alliance Oil Ukraine (2,000 tons).
Two foreign companies engaged in Azerbaijani energy projects, provided their updates and future plans.
Norway’s Equinor said that together with SOCAR, it is in the process of setting up the joint operating company for Karabagh field.
There are no updates on the project beyond that at this stage, said the company.
With regards to Ashrafi-Dan Ulduzu-Aypara Equinor recalled that it has decided to postpone the drilling of the Aypara prospect due to challenges in operating during the current Covid-19 context. “It is too early to indicate when the well will be spudded, and a new timeline will be concluded later.”
Spanish Enagas company, which is one of the Trans Adriatic Pipeline (TAP) shareholders, said that until the start-up of the TAP project, the company will continue, as planned, making capital contributions to TAP for a value of €4.8 million, until a total planned investment of €222 million is reached.
Another important highlight of the week was IMF forecast on Azerbaijan’s oil and gas sector.
The International Monetary Fund forecasts that the volume of Azerbaijan’s gas exports will rise to 117.4 million barrels per day in 2020 and up to 132.2 million barrels per day in 2021. In 2019, the given forecast was equal to 96.5 million barrels per day. According to the report, IMF predicts that the volume of gas production in Azerbaijan will increase to 244.2 million barrels per day in 2020 and to 260.7 million barrels per day in 2021. In 2019, this forecast was equal to 227.7 million barrels per day.
The fiscal breakeven oil price for Azerbaijan in 2020 will be $63 per barrel, and $67.4 per barrel in 2021, at which financial losses and state profits converge and balance. In 2019, the mentioned indicator was $45.1 per barrel.
According to the report, the IMF predicts the external breakeven oil price for Azerbaijan in 2020 at $77.9 per barrel, as well as at $91.3 per barrel in 2021. In 2019, this figure was $79.1 per barrel.
The State Customs Committee and State Statistical Committee also released their estimations regarding Azerbaijan’s energy sphere.
The State Customs Committee (SCC) estimates that Azerbaijan exported over 10.1 billion cubic meters of gas from January through September 2020, which is 11.5 percent more compared to the same period of 2019. According to SCC, the value of exported natural gas in the reporting period totaled over $1.89 billion, having grown by 4.4 percent compared to a year earlier. The SCC said that the export of natural gas from Azerbaijan for the mentioned period made up 17.88 percent of the total export volume.
SCC said that Azerbaijan exported more than 21.8 million tons of oil from January through September 2020, which is 6.1 percent less compared to the same period of 2019. The value of the exported in the reporting period oil made up $7.15 billion, having decreased by 36.5 percent year on year. At the same time, the volume of export of petrochemical products by the country amounted to 809,660 tons, which is 14.3 percent more compared to the same period of 2019. In monetary terms the total volume of exports from Azerbaijan for the reporting period amounted to $10.5 billion, showing an annual contraction of 28.8 percent.
The State Statistical Committee of Azerbaijan said that around 4.3 billion manat ($2.52 billion) were invested in the Azerbaijani oil and gas sector from January through September 2020, which is 16.2 percent more compared to the same period of 2020.
Azerbaijan’s Energy Minister Parviz Shahbazov published an article reflecting latest updates and future plans related to Azerbaijan’s electricity generation and renewable energy sphere.
The total power generation capacity of Azerbaijan has reached 7,516.5 megawatts over the past ten years due to the comprehensive measures implemented in the energy sector of Azerbaijan in connection with the commissioning of 23 new power plants with a capacity of 2,055.4 megawatts.
Demand for electricity and the dynamics of production volumes are expected to spike in the coming years.
It is predicted that by 2025 the demand for electricity in our country will grow to 25.5 billion kW/hours, and electricity production, including exports, will reach 30 billion kW/hours. Part of these production capacities will be achieved through the Shimal-2 power plant with a capacity of 409 MW commissioned in 2019, and the Gobu power plant with a capacity of 385 MW, which was laid out this year and planned to be commissioned in 2022.
The full meeting of electricity demand requires construction of new thermal plants.
The wind and solar power plants with a capacity of 440 megawatts will be built with a total volume of foreign investment of about $400 million, which will be an example of attracting investors to one of the first projects in the field of renewable energy in our country.
A draft law "On the efficient use of energy resources and energy efficiency", prepared in the framework of measures related to energy efficiency, is also under consideration.
The adoption of the law will create a legal mechanism for the efficient use of energy using modern energy efficiency tools.
In addition, a National Action Plan for Energy Efficiency was developed with the support of specialized international organizations. The plan is aimed at ensuring efficiency in various sectors of the economy, including the energy sector.
The development of the "Strategy for the long-term development of the energy sector of Azerbaijan" continues.
The document, prepared for the first time and covering the period up to 2050, reflects such areas as electricity, gas supply, heat supply, energy efficiency, the use of renewable energy sources, low-carbon transport and an analysis of the strategic directions of the energy sector development under various scenarios.
Azerenerji and Azerishig said that Azerbaijan plans to build four power supply substations in Fuzuli, Jabrayil, Zangilan, and Gubadli districts, which have been liberated from Armenian occupation.
According to the companies, design work related to the future construction of 35 kV substations in the districts is being carried out.
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