INTEREST TO AZERBAIJAN FIELDS INTENSIFIES
Caspian Energy (CE): Mr. Yusufzadeh, how would you estimate the oil and gas reserves of the State Oil Company of Azerbaijan (SOCAR)? Have these reserves increased for last years?
Academician Khoshbakht Yusufzadeh, the First Vice-President of SOCAR: The key changes are related to productive category of the reserves. For example, when the Contract of Century was signed in 1994, the oil recoverable reserves of the block of fields of Azeri-Chiragh-Gunashli (ACG) were estimated at 511 million tons of oil, later as a result of the additional exploratory works conducted on the contract area last year, the oil recoverable reserves of these fields increased up to 924 million tons. After the first exploratory well was drilled on the Shah-Daniz deposit, which was found in 1999, its hydrocarbon reserves were estimated at 700 billion m3. Later as a result of the drilling of exploratory and appraisal wells both in the northern-east and southern-west sections of the deposit, where the fourth exploratory well is being drilled, the hydrocarbon recoverable resources of the Shah-Daniz field have considerably increased. The resources of the field are currently estimated at 1.2 trillion m3 of gas and 240 million tons of condensate.
During conducting exploratory works on other areas of the Azerbaijan sector of the Caspian Sea, Ashrafi and Garabagh fields were found. That has also allowed us to increase volumes of recoverable reserves of hydrocarbons of industrial categories.
CE: What will be the plans for intensifying geological and exploratory works in Azerbaijan's Caspian Sea sector?
Mr. Khoshbakht Yusufzadeh: Due to the fact that need for the hydrocarbon does not only reduce but constantly increase, the scope of exploratory works in Azerbaijan will be on the rise the next years. It refers not only to the works carried out within the concluded agreements, but also SOCAR's own activities. It may also refer to new contracts, which are likely to be signed soon.
Today SOCAR is not that organization, which operated in the early years of its foundation, its cooperation with foreign companies grew stronger.
Today SOCAR is gradually turning into a world-standard company, which can operate on those sections of Azerbaijan's Caspian Sea sector, which the state-run company earlier could not access.
In accordance with the recently-adopted programme, we have intensions to resume exploratory works within the south-east of Absheron peninsula on Bulla-Daniz field, Umud structure, as well as launch exploratory drilling on Babek structure.
Our specialists have carried out works on appraisal and projecting the drilling of a well on the area of Nakhchivan. Resuming exploratory works on this structure is one of the priorities for SOCAR as well.
Certain plans are connected with the moderate fields of Garabagh and Ashrafi, which were found jointly with foreign companies.
CE: How is the situation with the supplementary exploration and development of those structures in Azerbaijan's Caspian Sea sector, which were abandoned by foreign companies?
Mr. Khoshbakht Yusufzadeh: I have repeatedly pointed out in my articles and statements that the major difference that distinguishes us from our foreign partners is our fixing a task during searching for a place to drill the first well at conducting exploratory activities.
In their turn, fixing a place for a first well, foreign companies put their commercial considerations at the top of the list, i. e. they want to immediately receive a reply not only to the availability of hydrocarbon reserves on the given area, but also development profitability. For its part, it will often lead to laying wells in deep beds of structures resulting in exceeding the outlines of a deposit.
We consider that the economic profitability of wells may considerably vary as different integral parts are changed, and prices on hydrocarbons first of all. I can cite instances of the increasing interest of foreign companies in those structures, which were earlier deserted by them. Virtually most of the projects, which were suspended earlier - Absheron, Nakhchivan and several others are attractive again. I can mark the companies, which show the real interest to Azerbaijan's offshore structures. These are BP, Statoil, Total, Wintershall, and several others.
CE: Which works are being carried within the cooperation with other Caspian countries?
Mr. Khoshbakht Yusufzadeh: Azerbaijan is presently a link in the East-West transport corridor. Oil and oil products from Kazakhstan and Turkmenistan are being uninterruptedly transported via Azerbaijan. For example, only since the beginning of the current year, 820,000 tons of oil and oil products from these countries have been carried out via the territory of Azerbaijan. We are negotiating on increase in cargo oil volumes, as well as Kazakhstan's joining the Baku-Tbilisi-Ceyhan.
However, our relations with Caspian countries are not restricted to oil and oil products transportation issues only, though it is actually our priority. Our companies and enterprises are taking part in different projects being implemented in the Caspian offshore. Particularly, within our cooperation with, representatives of the Integrated (Complex) Offshore Geological and Exploration Sub-department of the Geophysical and Geological Department of SOCAR jointly with their colleagues, "Offshore Engineering Geology" have conducted engineering-exploratory works in the Russian, Kazakhstan, and Turkmenistan sectors of the Caspian Sea. SOCAR's Exploratory Geophysics Department jointly with a Norwegian company is taking part in an exploration seismology project in Kazakhstan's Caspian Sea sector. All these are just a small part of possibilities to use SOCAR's potential.
We believe that our cooperation with Caspian countries will only grow stronger and that SOCAR's drilling and construction departments', oil fleet's, and other subdivisions' capacities will be involved in projects being implemented in the Caspian offshore.
CE: Which measures are being taken by SOCAR to increase gas production from Shah-Daniz?
Mr. Khoshbakht Yusufzadeh: As far as you know, four pre-drilling wells have been drilled on Shah-Daniz field within the Stage 1 Project, with one of them being put into operation. The average daily production rate of the well is over 5 million m3 of gas and 1,400 tons of condensate. On the whole, starting from the launch of development of Shah-Daniz, over 410 million m3 of gas and 120,000 tons of condensate have been produced from the field. Works on putting the remaining wells into operation are currently underway as well. Here I should note that to date, neither SOCAR nor our partners within the Shah-Daniz Project, such companies as BP, Statoil, and Total have had an experience in developing such difficult gas fields from the geological point of view. Many technical solutions being made have been virtually never used anywhere before. It goes without saying that all these have an effect on the term of putting the well into operation and creates certain difficulties.
If everything is fine by the end of 2007 we intend to complete all activities on putting the remaining wells into use that allow us to considerably increase gas and condensate production volumes.
CE: What measures are being taken by the State Oil Company of Azerbaijan to increase gas production in the country due to the cessation of Russian gas import to the country?
Mr. Khoshbakht Yusufzadeh: SOCAR's present-day priority task is to increase gas production volumes. In addition to the expected increase in associated gas production volumes from the block of fields of Azeri-Chiragh-Gunashli (ACG), as well as free gas volumes produced from Shah-Daniz deposit, SOCAR has worked out an action programme targeted on increasing gas production at its own.
In accordance with the above mentioned programme, new wells are expected to be drilled on reservoirs with gas. The major scope of activities is concentrated on Gunashli deposit, as well as the fields of Bulla-Daniz and 8 Mart. If in 2005 SOCAR produced 3.2 billion m3 of gas, then in the current year (2007), the state-run company is expected to produce 5.3 billion m3 of gas, and 8.0 billion m3 - in 2008, and the last figure is two and a half more than in 2005.
Thank you for the interview.