Caspian Report - Issue 06 - Winter 2014

talking about exporting up to 50 bcm
by 2025. At present, gas production is
limited to Shah Deniz, small volumes
of associated gas at the Azeri, Chirag
and Guneshli oil fields, and insignificant
volumes produced at the SOCARowned
Umid field. But the consortium
led by Total working at the Absheron
field is aiming to commence output
in 2020. With reserves estimated at
350 bcm, Absheron is expected to produce
3-5 bcm each year, initially. The
Umid field could export 6 bcm in the
medium term. Azerbaijan plans to develop
a number of other offshore Caspian
fields, including Shafag-Asiman,
Zafer-Mashal, Nakhichevan, and Araz-
Alov-Sharq. With only three drilling
rigs at the moment, the Azerbaijani authorities
are planning to construct four
floating drilling rigs over the next three
years at a total cost of $4 billion. Clearly,
officials in Baku will be seeking to ensure
that future gas production from
these fields, after meeting domestic
demand, will be exported to markets
in Turkey and beyond through an expanded
network of pipelines running
across the Caucasus.
AZERBAIJAN AND TURKMENISTAN
The SGC will eventually consist of several
interconnected legs. In its initial
form the corridor will run from the
Shah Deniz gas field to southern Italy
via the SCP, TANAP and TAP. The SGC
could be later expanded and developed,
for example, to hook up to more
consumers in northern Europe. The
corridor could also be connected with
other suppliers in the Caspian region,
the Gulf, and the eastern Mediterranean
as originally envisioned by the
European Commission. For instance,
Turkmenistan has expressed a definite
interest in linking up with and thereby
extending the SGC by lobbying for the
construction of a Trans-Caspian Gas
Pipeline (TCGP), which would connect
Turkmen gas fields with the SCP
network.
THE SECOND PHASE OF DEVELOPMENT AT SHAH DENIZ
WILL INCREASE ANNUAL PRODUCTION BY A FURTHER 16-
17 BCM AND BOOST CONDENSATE OUTPUT TO 120,000
BPD.
The construction of a $2-3 billion, 400
kilometer-long gas pipeline across the
Caspian Sea with an annual capacity
of 30-40 bcm has been on the drawing
board for some time. This could
connect with the massive Galkynysh
field in Turkmenistan which may hold
21 tcm of reserves. The authorities in
Ashgabat have declared that a 30 bcm
capacity East-West Turkmen pipeline
linking the Galkynysh field with the
Caspian will be ready by June 2015.
Turkmen officials refer to plans to export
180 bcm to various customers by
2030. But, concerned at the prospects
of competition from Turkmen gas exports
to Turkey and other markets,
Russia and Iran have opposed the construction
of a TCGP - ostensibly on environmental
grounds. Baku and Ashgabat
are also disputing the ownership of
certain oil and gas fields in the Caspian
Sea, and this has hindered talks on the
possible construction of a gas pipeline
connecting the Turkmen and Azerbaijani
shores of the Caspian. Nevertheless,
Ankara and Brussels have been lobbying
for the construction of a TCGP.
Agreements signed in 1998 and 1999
by Turkish and Turkmen officials anticipated
the export of 16 bcm of Turk-
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CASPIAN REPORT, WINTER 2014