BAKU, Azerbaijan, August 13. The revenues of the State Oil Fund of Azerbaijan (SOFAZ) from the sale of gas and condensate from the Shah Deniz field in the first seven months of 2023 amounted to $1.14 billion, Trend reports.
The fund's annual revenue from the sale of the field's resources climbed by 6.43 percent ($69 million).
The revenues from the Azeri-Chirag-Guneshli (ACG) block of fields amounted to $4.1 billion from January through July 2023. ACG income decreased by more than 26.8 percent year on year.
Over 82 percent of the capacity of the Interconnector Greece-Bulgaria (IGB) pipeline for the gas year 2023-2024 is already booked. The successful results were achieved by the independent transmission operator ICGB at the quarterly auctions held earlier, on August 7.
Currently, for the first quarter of the upcoming gas year, the gas pipeline has booked capacity of 76 percent. For the remaining 3 quarters, bookings exceed 84 percent of the facility's total technical capacity. ICGB continues offering the remaining free capacity in both daily and monthly auctions, ensuring transparent and equal access to all interested traders.
The capacity of the interconnector is marketed on two European booking platforms - PRISMA for the interconnection points at Komotini where the pipeline is connected with the Trans-Adriatic Pipeline (TAP) and the Greek national operator DESFA, and RBP platform for the interconnection point at Stara Zagora where IGB connects with the transmission system operator Bulgartransgaz.
IGB currently operates at a total technical capacity of 3.3 bcm per year, much of which is already booked for the upcoming gas year. This is a significant achievement for a project that was so recently launched and yet, we’re already looking at expanding its capacity to 5 bcm per year given the market interest.
In addition, the production of hydrocarbons in Azerbaijan in 2023 will grow by 11,000 barrels per day (up to 7,000 barrels per day on average).
The production of liquid hydrocarbons remained relatively stable in June compared to the previous month, averaging 6,000 barrels per day, which is 26,000 barrels per day less year-on-year, in Azerbaijan.
Thus, OPEC's forecast for the current year was revised downward by 11,000 barrels per day compared to the previous month's estimate due to lower than expected production at the main oil fields in June.
According to OPEC’s forecast, the production of liquid hydrocarbons will decrease by about 30,000 barrels per day and amount to 0.7 million barrels per day in Azerbaijan in 2024.
It is predicted that the growth will be partially provided by the gas condensate projects "Shah Deniz", "Absheron" and "Umid-Babek". Production at the Azerbaijani ACG oil fields should also increase next year thanks to the seventh ACG platform. However, the overall rate of decline will be higher than the planned growth.
The International Energy Agency (IEA) expects that oil production will amount to 63,000 barrels per day in Azerbaijan in 2023 . The forecast was slightly revised downward by 1,000 barrels per day compared to the previous report.
Thus, oil production in Azerbaijan in the first and second quarters of this year, according to IEA estimates, amounted to 64,000 and 62,000 barrels per day, respectively. At the same time, the agency expects that oil production will amount to 62,000 million barrels per day in the third quarter of 2023, and in the fourth quarter - 64,000 barrels per day, in Azerbaijan.
It is predicted that oil production in the country in the first quarter of 2024 will grow to 67,000 barrels per day and will remain at this level throughout the year. Compared to the previous forecast, this estimate was revised downward by 1,000 barrels per day.
Oil production amounted to 500,000 barrels per day in Azerbaijan in July 2023. As of July, Azerbaijan's quota for oil production under the OPEC+ deal was 684,000 b/d. Thus, according to S&P Global Commodity Insights, Azerbaijan lagged behind the OPEC+ quota by 184,000 barrels per day in July.
Moreover, Azerbaijan has good opportunities for the development of both green and blue hydrogen. With well-established refining, ammonia and methanol markets and extensive natural gas distribution systems that can be converted to hydrogen, Azerbaijan has great potential to meet the demand for low-carbon hydrogen.
Hydrogen can help decarbonize these industries. With large volumes of renewable resources, as well as direct access to natural gas reserves at the Shah Deniz field, Azerbaijan has good opportunities to develop both green and blue hydrogen.
In addition, the existing natural gas supply infrastructure - the Southern Gas Corridor - will potentially allow hydrogen to be mixed with natural gas for export.
Azerbaijan has high-quality wind and solar resources, 1,305 MW of renewable capacities have been installed as of 2020. The main type of renewable energy currently used in Azerbaijan is hydropower, although there is a high wind energy potential in the Caspian Sea. The low cost and high potential availability of renewable electricity will contribute to the creation of a low-carbon hydrogen economy in Azerbaijan.
This week, Azerbaijan can produce green hydrogen at a lower price than anywhere else in Europe if cost-effective transportation measures, such as repurposing gas pipelines, are applied. Azerbaijan has a great potential for the development of the blue hydrogen market due to natural gas reserves, which can reduce costs compared to equivalent production in Europe.
However, uncertainties should be taken into account, including future natural gas prices, transportation and CO2 capture costs, and storage locations. Blue hydrogen will also require additional investments to comply with regulatory requirements, and uncontrolled emissions will need to be reduced.
The production of green hydrogen is cost-effective. It is advisable to export it to regional energy markets (including the EU) and use it for domestic consumption.