Azerbaijan’s new gas condensate find on the Shafag-Asiman offshore block in the Caspian Sea, which is under development with British oil major BP, is expected to boost the ex-Soviet country’s energy gas potential.

Azerbaijan’s state energy firm SOCAR said that “significant” gas condensate was discovered at a depth of over 7,000 meters below the seabed, but an additional test would be carried out to clarify the reserves of the field.

Experts say that the discovery may signal that Shafag-Asiman can become the second major offshore Caspian gas field after Shah Deniz.

“The appearance of the first gas condensate in a new field in the Azerbaijani sector of the Caspian Sea in deep water will make a valuable contribution to increasing our proven hydrocarbon reserves and, as a result, ensuring the energy security of our country and many countries,” the country’s President Ilham Aliyev said in a statement.

Shafag-Asiman is estimated to contain at least 500 billion cubic meters (bcm) of gas and about 65-70 million tonnes of condensate. The field is located 125 km southeast of Baku and covers an area of ​​1,100 square kilometers.

SOCAR and BP signed a 30-year production sharing agreement on exploration and development of Shafag-Asiman in October 2010.

Shafag-Asiman reserves, if finally proved, will add to Azerbaijan’s gas exports to Europe that is trying to reduce its energy dependence on supplies from Russia.

Azerbaijan has started gas supplies to Europe through the $40-billion Southern Gas Corridor (SGC) last year from the giant Shah Deniz II field. Shah Deniz, which is developed by a BP-led consortium, is estimated to contain 1.2-1.5 trillion cubic meters of gas and 240 million tonnes of condensate. The proven gas reserves in Azerbaijan are estimated at 2.6 trillion cubic meters. SGC is expected to bring around 10 billion cubic meters (bcm) per year to Europe and can be tripled depending on demand in the future. Another 6 bcm of gas going via the SGC is designated for Turkey.

SGC consists of Trans-Anatolian Pipeline (TANAP) through Turkey, the South Caucasus pipeline extension through Georgia and the Trans-Adriatic Pipeline (TAP) to Greece, Albania and Italy. TAP started to operate in December 2020, marking an important milestone in Azerbaijan’s energy export history.

Azerbaijan got another boost earlier this year, when Aliyev and President of Turkmenistan Gurbanguly Berdimuhamedov unexpectedly appeared via a live video hookup and announced that they had finally resolved a last thorny issue which had bedevilled ties since the Soviet collapse.

The last dispute concerned an oilfield roughly in the middle of the Caspian Sea. The delimitation of the Caspian had been a stumbling block diplomatically and economically between the five Caspian littoral states – Azerbaijan, Kazakhstan, Iran, Russia, and Turkmenistan – until a 2018 agreement. Nonetheless, the field, now jointly called “Dotslug” (Friendship in both Azerbaijani and Turkmen) was still being haggled over due to its central position in the mid-Caspian, straddling dividing lines.

Under the televised agreement, the two countries agreed to develop the field jointly. Though the amount of recoverable crude oil reserves in the field are relatively modest, they still could help Baku make up for offshore oil output which has been gradually falling over the past few years.

At the same time, the agreement could potentially pave the way for the green light for a long-contemplated natural gas pipeline along the sea bed of the Caspian Sea the long-discussed Trans-Caspian Pipeline (TCP).

Turkmenistan has the world’s fourth largest reserves of proven recoverable natural gas, and the country is in desperate condition economically, with its closed, autarkic and command economic model increasingly unable to supply even basic staples a long-practiced, outdated rationing system for its population of six million.

The viability of the TCP is widely debated, and would depend on – naturally – prices for natural gas on the world and EU market, as well as whether or not Turkmenistan- which has long resisted direct involvement by major western firms in its economy – would contemplate widespread liberalisation.

“It all depends on whether or not the cost of constructing the route would be profitable or even economically viable,” said Zaur Shiriyev, an analyst on the South Caucasus region with the Brussels-based International Crisis Group. Nonetheless, he noted, the mere fact that the route was again in play was an important diplomatic coup for Baku.