In Terms of Commercial Attractiveness, "Azeri-Chirag-Guneshli" Has Proven to Be The Most Appealing Oil Project in the Caspian Basin
In Terms of Commercial Attractiveness, "Azeri-Chirag-Guneshli" Has Proven to Be The Most Appealing Oil Project in the Caspian Basin
In two days, it will be 30 years since the signing of the "Contract of the Century" - the production sharing agreement (PSA) for the deepwater Caspian fields of "Azeri-Chirag-Guneshli". The contract was initially signed for 30 years. However, on September 14, 2017, it was extended until 2050. Production of the first oil began in early November 1997.
According to bp-Azerbaijan (the project's operator), as of July 1, 2024, approximately $56.7 billion had been invested in the ACG project (of which $45.5 billion were capital expenditures). As a result, 4.39 billion barrels of oil have been produced.
Is this amount of expenditure for the ACG project high or low? This question can be answered by comparing ACG with another Caspian project - the Kazakh mega project "Kashagan" (discovered in 2000, with recoverable reserves estimated at around 1.3 billion tons of oil, and production only began in October 2016). For the Kashagan project, approximately $56 billion in capital expenditures was invested to extract the initial volumes of oil. Another comparison can be made with the “Tengiz” field development project, located onshore in Kazakhstan (discovered in 1979, with reserves of over 1.1 billion tons, development began in 1985, and the Kazakh government signed an agreement with foreign investors in April 1993). The capital expenditures alone for the expansion project of the “Tengiz” field (from 26 million tons to 38 million tons) exceed $46 billion.
It should be noted that during this time, 229.9 bcm of associated gas have also been produced at the ACG contract area. Of these volumes, only 56.9 bcm have been converted into marketable volumes, while 173 bcm have been reinjected into oil wells to maintain reservoir pressure.
According to the contract, associated gas at the Sangachal terminal is transferred to the State Oil Company of Azerbaijan free of charge.
Energy
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The State Oil Company of Azerbaijan (SOCAR), founded in September 1992, plans to diversify its project portfolio towards low-carbon initiatives by 2035, Hikmet Abdullayev, SOCAR's Deputy Vice President, said at a panel discussion at Baku Climate Week. "SOCAR has a clear vision of how our company will evolve from an oil and gas entity into a national energy company. We believe that by 2035, we will have a diversified portfolio that includes low-carbon projects alongside hydrocarbon extraction assets," he stated.
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On October 2, British bp, SOCAR Green (a subsidiary of SOCAR), and the Azerbaijan Investment Company (AIC) signed a Joint Participation Agreement in Baku for the construction of the 240 MW “Shafag” solar power plant in Jabrayil.
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Rovshan Najaf, President of SOCAR, met with Alexander Dyukov, Chairman of the Board of Directors of “Gazprom Neft”, on October 2. SOCAR’s social media publication noted that the meeting involved discussions on mutually interesting issues, but did not provide further details.
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Serbian company “Srbijagas” Director Dušan Bajatović stated that gas supplies from Azerbaijan cannot fully replace Russian gas imports for Serbia. "With the contract with Azerbaijan, we have shown our desire to diversify, but the problem is that Azerbaijan currently does not have such volumes of available gas. At the moment, such volumes can only be procured from Russia," Bajatović said during a broadcast on Serbian Radio and Television (RTS).
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