BAKU, Azerbaijan, June 29
By Leman Zeynalova – Trend:
A pressing challenge in the Caspian Sea region is to bring together the two sides of the investment picture – upstream and carbon-neutral, Ashley Sherman, principal analyst on Wood Mackenzie’s Russia and Caspian upstream team, told Trend.
“In our view, host governments should proactively create fiscal incentives to support both streams of investment. Regional governments increasingly share the net zero ambitions of their largest international investors. New large-scale projects must fit the bill. For the majors, regional decarbonisation is a portfolio play too. Several have already taken wind and solar positions, benefitting from their lengthy regional experience,” he said.
Sherman noted that Unlike between 2000 and 2020, there is no “elephant-sized” brownfield development FID imminent. Kazakhstan’s US$45 billion Tengizchevroil expansion (FGP-WPMP) is winding down annual investment from its peak in 2018-19. The Chevron-led megaphase is the most recent to sustain regional capital expenditure. It could be the last, as the majors target quite different future portfolios and even more robust project returns.
“Caspian upstream investment suffers from a chronic lack of diversity. Brand-new major capital projects that are ripe for evaluation are few and far between. The region does not lack for discovered undeveloped resources. But, when it comes to new larger-scale greenfield projects, especially gas, the commercial case is often far from compelling,” the analyst said.
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