SOCAR and Gazprom swaps to up oil output at ACG field

Sep 21, 2015 12:00 AM

Temporary gas swaps between Azerbaijan's state energy giant SOCAR and Russian Gazprom would increase oil production at the Azeri-Chirag-Gunashli block of fields in the Azerbaijani sector of the Caspian Sea.

This remark was made by SOCAR President Rovnag Abdullayev on September 17.

He told journalists that gas consumption has greatly increased in Azerbaijan over the past two years.

"The gasification process has been actively carried out in Azerbaijan recently,” Abdullayev said. "Currently, its level exceeds 90 percent. This increases demand for gas. Therefore, we redirected those volumes of gas, which we supplied to Russia, to the domestic market."

The SOCAR president also noted that the gas extracted at the giant Shah Deniz field in the Azerbaijani sector of the Caspian Sea is contracted to supply Georgia and Turkey.

"Therefore we don’t have additional volumes for Gazprom. In this regard, a gas swap with Gazprom will allow us to further ensure gas supply to southern regions of Russia, to test out our gas storage facilities, as well as, in case of a consistently high level of injection into them, to reduce the volume of extraction of associated gas at the ACG, and to pump reservoirs to the maximum extent to increase oil output in the block," he added.

Almost a quarter of all gas produced at the ACG is pumped back into the reservoir to maintain pressure. In 2014 BP delivered 2.76 billion cubic meters of associated gas to SOCAR versus 2.19 billion cubic meters in 2013.

SOCAR and Gazprom have reached a preliminary agreement and an expert group has been created to work on the technical details. The agreement will be signed in 10 to 15 days.

Earlier, Azerbaijan's AzMeCo methanol production plant signed an agreement on the purchase of up to 2 billion cubic meters of gas per year from Gazprom Export Company.

On October 14, 2009, Gazprom signed a contract with SOCAR on the purchase of Azerbaijani gas. The contract, which is still in force, allows the companies to suspend and resume gas supplies at any time.

The ACG fields have been active since 1997. Production first began at the Chirag part of the block, followed by the Azeri Project; Central Azeri in February 2005, West Azeri in December 2005, and East Azeri in October 2006.

The Deepwater Gunashli section launched production in April 2008.

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