France’s Total and Norway’s Equinor are planning to fire up new developments in Azerbaijan's Caspian Sea waters in the near future, writes Kama Mustafayeva.

While Total’s Absheron field and Equinor’s Karabakh project, jointly operated with state oil company Socar, are much smaller in terms of investment and output than BP’s Azeri-Chirag Guneshli (ACG) and Shah Deniz, they bode well for the future of Azerbaijan’s oil and gas industry.

The construction and drilling programme for the promising Absheron gas and condensate discovery is under way although, as with Karabakh, more exploration is needed to confirm the feasibility and extent of future development.

Absheron was discovered by the French major in 2011. Total expects to produce the first gas in 2020 with a small-scale programme modest both in investment and expected production rate.

The development scheme is a tie-back of one subsea well in 500 metres of water to Azerbaijan’s oldest offshore facility, the Oil Rocks complex.

The well will produce gas through a 34-kilometre line connected to a small platform to be built just at the inlet of Oil Rocks.

With around $1 billion investment, Absheron will produce about 1.5 billion cubic metres per annum of natural gas, which will be marketed domestically.

According to Denis Lemarchal, Total’s country manager for Azerbaijan, Total and its project partner Socar have aimed to do a fast-track project with limited capital expenditure and quick returns.

Until 2014-2015 Total was considering a relatively high-investment project around of $5 billion with subsequent yearly production of 5 Bcm of gas.

However, the oil price downturn forced it to reconsider and rescale its original plans.

The future expansion of the development scheme has yet to be determined.

First, the results of an appraisal well spudded in May 2018 have to confirm Total’s recoverable reserves expectations and help the company fine-tune knowledge of the reservoir.

In 2012 Total estimated gas and condensate resources of 150 Bcm to 300 Bcm in the Balakhany and Fasila formations on the Northern compartment of the field, based on results from the ABX-2 exploration well.

Total will also need to identify a market for any future Absheron gas production, most likely a mix of domestic consumption and exports, Lemarchal says.

“There are still some opportunities in the domestic market and there are a lot of potential buyers along the Southern Gas Corridor, including in Turkey and Europe,” he says.

However, the gas market is highly competitive.

“We have to identify and refine our development scheme to limit capex, which means that we must optimise the use of existing facilities,” he says.

Norway’s Equinor is planning exploration and appraisal activity in the Caspian region in 2019.

Equinor signed two deals with Socar last year and holds a licence for the vast area to the north-west of ACG, where it is also a partner.

While Equinor and its joint operating partner Socar are working on a development scheme for the small Karabakh field, the bigger Ashrafi-Dan Ulduzu-Aypara (ADUA) area has yet to be explored.

Equinor says it plans to begin gathering 2D and 3D marine seismic this spring to be followed by an exploration probe, most likely in 2020 or 2021.

Both Karabakh and the Ashrafi-Dan-Ulduzu block were explored in the late 1990s by international consortia without success.

They were abandoned after revealing what were deemed insignificant reserves of oil and gas.

Equinor hopes to be more successful with a new approach and advanced exploration technology.

Moreover, with developed offshore infrastructure in the Caspian and export pipelines in place, the company sees the potential for tie-back developments to justify its investments and make the fields profitable.

Weekly

Total and Equinor gear up for development