Baku finds gas for Nabucco

­The French corporation Total announced the discovery of a large gas field, Apsheron, on the Azerbaijani Caspian Sea shelf. This greatly increases the chances of building the European Nabucco pipeline, the main competitor to Russia’s South Stream.  

Total has come across gas-bearing sand at a depth of 6,550 meters. The well is located in the northern section of the Apsheron X-2 block, stretching over an area of 270 square kilometers. The well is located in 500 meters of water. The gas field is located 100 kilometers southeast of Baku, and about 25 kilometers northeast of another gas field, Shah Deniz.    

It is possible, say Total specialists, that the gas field extends outside of the Apsheron X-2 block licensed to Total EP Absheron. (Total’s share is 40 percent, while another 40 percent belongs to the State Oil Company of the Azerbaijan Republic (Socar), and 20 percent to the French GDF Suez).

The discovery was unexpected. After all, in the 1990s Chevron explored the Apsheron and even drilled a well there, but after not finding anything, refused to obtain a license. Now Total has confirmed that gas reserves are indeed present in the field. 

In order to complete exploration, another well needs to be drilled in the area. Production, however, will not start any earlier than 2021. Therefore, French and Azerbaijani specialists are inclined to replacing it by drilling an offshoot from the first well, or sidetracking. It would turn to the side at 4,000 meters. Then, gas production at Apsheron could begin in 2015, says the first vice president of Socar, Khoshbakht Yusifzade.   

Before this, Shah Deniz, which began operations in 2006, was not only the largest but the only significant gas field in Azerbaijan. Shah Deniz is also large by global standards – its natural gas reserves amount to 1.2 trillion cubic meters, and it has another 240 million tons of gas condensate. With the discovery at Apsheron, the country’s total gas reserves have increased to 2.55 trillion cubic meters, said Yusifzade.  

Today, the provisional gas reserves at Apsheron could be estimated at 300-350 billion cubic meters of gas and 40-50 million tons of gas condensate, say experts. 

“In order to have a final estimate of reserves, we will need several exploratory wells, at a price of $100-120 million each. Total is trying to save money by considering sidetracking, but time will be needed to examine the already-obtained reserves to determine the final tactic,” said Ibragim Guliyev, deputy director of the Geology Institute at the National Academy of Sciences of Azerbaijan. “The geological results are promising; everything points to the fact that the reserves will be confirmed. So production could start sometime in three to five years. But at this point, I won’t go as far as talking about production volumes.”    

Sidetracking of wells is a common practice in Russia.

“It makes it possible to cut the cost of drilling in half. Instead of $100 million that would be paid for a separate well, sidetracking will cost about $40 million,” said Vagif Kerimov, head of the department of theoretical fundamentals of searching and exploration at Russia’s Gubkin State University of Oil and Gas. “Western companies have a very careful approach to exploration. I believe that in the case of Apsheron, an exploratory well and an offshoot from the first well will be enough to study the gas-bearing region. The same is done here in Russia – after research is complete, production is launched from the existing exploratory well.”    

Shah Deniz is currently in the second phase of production, and with the discovery of Apsheron, Azerbaijan is turning into a major gas producer, said Guliyev.

Total’s unexpected discovery happened at a very convenient time for Baku, and looks more like skillful bait for the European Union, says Konstantin Simonov, director of the National Energy Security Foundation. 

“Outside of Russia, all gas pipeline projects in the region depend on Azerbaijan,” he said. “I’ll remind you that large gas reserves also exist in Iran, but it is under international sanctions. To transfer gas west from Turkmenistan, it is necessary to lay a pipeline across the bottom of the Caspian Sea. But without a settlement of the legal status of the sea, which requires Russia’s agreement, construction of the Trans-Caspian pipeline is impossible. I’m not surprised that the story about the new gas Klondike has surfaced today. Nabucco is in a difficult situation. It was promised to make agreements with gas suppliers this year. And now, having ‘discovered’ the new field, Baku is starting a big game with Europe. As for Total, there is not much risk – sorry if the reserves are not confirmed.” 

Nabucco is a project designed to supply gas to Europe while bypassing Russia. Gas from Iran, Azerbaijan, Iraq or Turkmenistan is expected to travel by pipeline through Turkey to Europe. Gas supply contracts for Nabucco have yet to be signed.

By Pavel Arabov

RT, September 14, 2011