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Russia’s Rosneft, Azerbaijan’s SOCAR establish joint venture

August 13, 2013, 19:44 UTC+3
New venture to produce and sell oil, details pending
1 pages in this article
Igor Sechin. Archive photo ITAR-TASS/ Mitya Aleshkovskiy

Igor Sechin. Archive photo ITAR-TASS/ Mitya Aleshkovskiy

MOSCOW, August 13 (Itar-Tass) - Russia’s oil major Rosneft and the State Oil Company of Azerbaijan Republic (SOCAR) have agreed to cooperate on oil and gas prospecting and production projects in various countries, including Russia and Azerbaijan. For these purposes, the parties plan to set up a joint venture on a parity basis, Rosneft said in a release on Tuesday.

Rosneft president Igor Sechin and SOCAR CEO Rovnag Abdullayev described this agreement as a new step on the path of expanding cooperation between Russi and Azerbajian in the energy sector. The agreement will make it possible for the companies to expand their geographical presence and to gain access to new markets and resources, and to optimize oil deliveries thanks to the joint use of the existing infrastructure.

A most probable project in Azerbaijan is Absheron.

According to earlier reports, Rosneft is looking at buying a share in Azerbaijan’s Absheron gas project on the Caspian shelf. During his previous visit to Baku, Rosneft’s CEO Igor Sechin discussed his company’s possible participation in the project with Azerbaijani President Ilham Aliyev. He also had talks with France’s Total, the project operator.

The Absheron field was discovered in the autumn of 2011. Its reserves are estimated at 350 billion cubic meters of gas and 45 million tonnes of condensate. The project shareholders are the State Oil Company of Azerbaijan Republic (SOCAR), which own a 40-percent stake, France’s Total (40 percent), and Gaz De France Suez (20 percent). In April 2013, Total said it planned to launch industrial production of gas at the Absheron field in 2020. Initial output is forecasted at three to five billion cubic meters of gas a year.

In June, SOCAR president Rovnag Abdullayev said that the development of new gas fields in Azerbaijan, including the Absheron project, would help his country to increase gas exports but would require additional pipelines to export gas to Europe. He said that it would be necessary to expand the capacity of the Trans-Adriatic pipeline and to open another route via Bulgaria, Romania and Hungary to Austria (Nabucco West), which was seen as an alternative to the Trans-Adriatic pipeline.

It is planned to pump up to 16 billion cubic meters of gas via the Trans-Adriatic pipeline, of which six billion cubic meters will be supplied to Turkey, and ten billion cubic meters - to European markets, including Greece, Italy and Bulgaria. If necessary, the pipeline’s capacity may be increased, if compressor stations are built. In June, the Shah Deniz consortium said it has opted for the Trans-Adriatic pipeline to export Azerbaijan’s gas to Europe.

Azerbaijan’s overall gas reserves are estimated at 2.6 trillion cubic meters.

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