05-06-08 Ex-Soviet Azerbaijan announced it plans to nearly double natural gas production by 2015 as Europe and Russia wrestle for control of vast energy resources in the Caspian Sea.
Gas production in Azerbaijan, a mainly Muslim state located between Iran and Russia, will soar to 47.5 bn cm per year by 2015 as it ramps up production at the enormous Shah Deniz offshore field, Khoshbakht Yusifzade, vice-president at state energy firm SOCAR, told a conference in Baku. At the annual event showcasing Azerbaijan’s energy industry, he said gas production this year would hit 27.4 bn cm, up from 16 bn cm last year.

The announcement comes amid renewed interest in Azerbaijani energy resources from its traditional partners in the West but also from Russian energy giant Gazprom. Gazprom said that it had made an offer to Azerbaijan for long-term supply contracts at “market prices.”
“Azerbaijan is a major producer of hydrocarbons... and a partner of Russia. We have common interests,” Gazprom chairman Alexei Miller was quoted as saying.

Azerbaijan has yet to respond to Gazprom’s offer. Azerbaijani Energy Minister Natik Aliyev told the conference that it would be considered along with all other offers.
“Azerbaijan will conduct an independent gas policy based on its national interests,” he said. Western energy companies, led by British giant BP, signed a raft of development contracts with Azerbaijan in the mid-1990s and built a strategic corridor of oil and gas pipelines from Baku, through neighbouring Georgia, to Turkey. International interest in Azerbaijan’s energy resources is surging as global energy prices soar and new technologies make it possible to tap oil and gas fields once considered unviable.

Europe’s dependence on Russia for gas supplies also has Western companies searching for alternatives. BP’s head in Azerbaijan, Bill Schrader, told the conference that new discoveries in the Caspian and new technologies are boosting Azerbaijan’s potential. He said BP, which is leading development of the Shah Deniz field, sees the field’s future as “truly promising.”
“Shah Deniz is one of the world’s largest and most challenging gas fields,” he said.

French energy group Total reportedly was close to signing a deal to develop the offshore Absheron oil and gas field, which it had once deemed was not commercially viable. Aliyev was quoted as saying Total and SOCAR “have agreed to the main principles of an agreement on the Absheron offshore field.”
Total and US energy firm Chevron had previously abandoned a project at the Absheron field in 2001.