BAKU

Azerbaijan has started production of natural gas from a fifth well on the north flank of its Shah Deniz II field, a move that will increase the output of a project conceived to reduce Europe’s dependence on Russian gas.

Starting production from another well on the north flank was planned for the fourth quarter of 2021, and “had been achieved safely and on schedule”, the BP-led consortium which is developing the Shah Deniz project said.

“The existing Shah Deniz 1 and 2 facilities’ total production capacity is currently about 70 million standard cubic metres of gas per day or more than 25 bcma,” the consortium said in a statement.

In July, the consortium started gas production at the field’s southeast flank, which consists of four wells, two new flowlines and a number of subsea structures. The flank reached full production rates in the third quarter of 2021. The daily production rates of the Shah Deniz Bravo platform reached the Shah Deniz Alpha rates for the first time. During the first three quarters of the year, the field produced around 16 billion standard cubic metres (bcm) of gas and around 3 million tonnes (24 million barrels) of condensate in total from the Shah Deniz Alpha and Shah Deniz Bravo platforms.

Gas has been pumped from the offshore Shah Deniz field’s first phase since 2006, delivering more than 10 bcm a year to Azerbaijan, Georgia and Turkey. The second phase started output in 2018, adding 16 bcm of gas production capacity at its peak to bring total capacity to 26 bcm.

Azerbaijan started supplying commercial natural gas to Europe from the second stage of the Shah Deniz project via its $40-billion Southern Gas Corridor in December 2020, when the corridor’s last part, the Trans-Adriatic Pipeline (TAP), became operational. Europe is a highly lucrative new market for Azerbaijan, as the continent is seeking to diversify its supply away from Russia, on which it still depends for 34 percent of its gas.

A total of 400 million standard cubic feet of gas per day will be added to current production levels, enabling Shah Deniz II to increase overall production to well over 2.4 billion standard cubic feet per day.

Azerbaijan’s goal is to eventually supply the European market with 10 bcm of gas a year, including 8 bcm to Italy and a combined 2 bcm to Greece and Bulgaria. This year, the country plans to export 5 bcm to Europe and over 12 bcm to Turkey.

Exports from Shah Deniz to Turkey amounted to 7.833 bcm in the first nine months of 2021 for $1.2 billion, exports to Georgia totalled 2.262 bcm for $282 million, to Europe – 4.663 bcm for $1.5 billion.

Apart from BP and Azerbaijan’s state energy firm SOCAR, participants in the Shah Deniz consortium are Turkey’s TPAO, Malaysia’s Petronas, Russia’s Lukoil, Iran’s NICO and SGC Upstream.