How much can Rosneft company affect energy policy of Azerbaijan?

On the eve of the visit of Russian President Vladimir Putin to Azerbaijan “Caucasian Herald” received press release of the Russian Rosneft oil company. It officially confirms that Rosneft company is interested in cooperation with Azerbaijan and has been considering various projects in this country, but no decisions have been made yet.

Ilham Shaban, head of the Baku Oil Studies Centre, and Leonid Gusev, senior scientist of the International Research Institute of the Moscow State University, described the Azerbaijani projects that Rosneft could be interested in.

Ilham Shaban first of all reminded that during his visit to Baku a month ago Igor Sechin did not disclose details of the talks, he just said that the Russian company is going to cooperate with Azerbaijan, in particular, with State Oil Company of Azerbaijan (SOCAR), establish a joint venture and work both in Russia, Azerbaijan and third countries. Expert said the works on the Caspian shelf could become the key project of the company.

Rosneft is a giant production company with huge reputation. However, though the company has been operating everywhere, it has no shelf projects, not considering the possible Arctic project. Rosneft has a good possibility to obtain a license for the Caspian shelf from the Russian Bowels of Earth Committee.

For several years Rosneft has been trying to receive a project on the Turkmenistan shelf, but it seemed to have either problem with the Turkmenistan authorities, or did not have a desire and they have refused, Shaban explained the preconditions for the Russian company’s intention to get the way out to the shelf on the territory of Azerbaijan.

“In Azerbaijan Rosneft could have a passive asset and in exchange SOCAR with a huge working experience on the shelf could carry out any works for Rosneft. Therefore, Rosneft could start a shelf project,” concluded Shaban.

Shaban also emphasized that one should not overestimate importance of Rosneft’s joining the Absheron project to provoke competition for Gasprom at the gas market, as Caucasian Herald earlier reported. “Let’s take LUKoil company, which has 10% share in the Shah-Deniz project. LUKoil is a passive player of the project – it has neither human resources there, nor technologies.

Once a year it takes part at the meeting of shareholders, invests into assets and collects dividends at the end of the year. The same could happen with Rosneft, if it joins Absheron project. It can receive dividends from the Absheron project no earlier than 2025 at best.

I do not think that we should overestimate the company’s joining this project and claim that Azerbaijan changes its positions to the gas projects or that Rosneft receives huge dividends, said Shaban and added that both SOCAR and Rosneft simply solve the current problems related to cooperation in the Caspian Sea.

Leonid Gusev, senior scientist of the International Research Institute of the Moscow State University, said that Rosneft could be interested in joining the Shah-Deniz Stage-2 project.

“I think that they will establish cooperation in this area. During 13-14 years Russia and Azerbaijan had relationships in the oil and gas industry, there was a decline recently and now they are going up again.

When work on the Nabucco project has started and great hopes were pinned on Azerbaijan, Russia did not like that, because 30 billion cub.m. of gas could be transported from Azerbaijan to Europe via Georgia, Turkey and Greece.

Another branch of this pipeline had to be laid through Bulgaria, Romania and Hungary, which are Russian gas importers. Now the Nabucco project has failed, but trans-Adriatic pipeline (TAP), via which 10 billion cub.m. of gas will be transported, does not touch these important for Gasprom countries,” Gusev said.

“I think that now attention will be paid to the Shah-Deniz project. A very powerful impetus to development of the oil and gas resources on the Azerbaijani shelf was given in 1994. Significant number of western countries, such as American, British, French, Italian, Dutch and others, are present there. But Russia was always interested in participation in this project.

They have cooperated to a certain extent, but now Russia has again expressed interest in further cooperation for development of this oil and gas field, said Gusev.