TBY talks to Barış Bozkaya, Country Manager of the Turkish Petroleum Corporation (TPAO), on the company’s investments in Azerbaijan, the Nabucco project, and his outlooks on the regional energy sector.
TBY TPAO is one of the key investors in Azerbaijan. Which oil and gas projects TPAO is involved in the country, and what levels of activity are you seeing in the sector?
BARIŞ BOZKAYA TPAO has shares in four significant projects: ACG, Shah Deniz, BTC, and SCP. The ACG project is focused on oil production in the Azeri-Chirag-Guneshli field and the Shah Deniz Project is one of the largest natural gas-condensate fields in the world. In the ACG project, a single development plan, composed of seven platforms, has been completed. An eighth platform, called the Chirag oil project, is also under construction. Daily production from the ACG field is around 800,000 bbl/d. This production is transported through three export routes: from the Sangachal terminal in Azerbaijan to Supsa via the Western Route Export Pipeline (WREP), then to Batumi by rail, and then via the BTC pipeline to Ceyhan on Turkey’s Mediterranean coast. At the Shah Deniz project, first stage operations are seeing production exported to Georgia, Azerbaijan, and BOTAŞ, Turkey’s state-owned crude oil and natural gas pipeline and trading company. The second phase of development for this project is currently being evaluated. The first stage of gas production is targeted to come online in 2017. As can be understood, there has been an increase in demand for natural gas from Europe, Italy, and Eastern Europe. In addition to this, there is an ongoing exploration project called Absheron in Azerbaijan, which is expected to finish drilling the first exploration well in 2011. In addition, the State Oil Company of Azerbaijan (SOCAR) has been exploring the Umid-Babek prospect areas. In my opinion, there is a high chance of discovering a further hydrocarbon resource offshore in Azerbaijan.
What sort of fields will we see coming online in the more distant future?
As mentioned by the President of Azerbaijan, the country’s gas fields will likely reach their full potential in the next decade. In addition, an agreement has been signed between SOCAR and BP for the Shafag-Asiman D8-D10 blocks. In contrast to years past, the oil and gas industry is growing steadily as a result of a decrease in the risk profile for Azerbaijan. A contentious issue also exists in the form of the Araz-Alov-Sharg fields, which is a reservoir the ownership of which is being contested by Iran and Azerbaijan. Overall, the operating agreements covering the Shah Deniz field will end in 2036, whereas for ACG they will end in 2024.
To what extent will Azerbaijan’s reserves help to contribute to the Nabucco pipeline project?
TPAO is an investor company in the Shah Deniz field. Except for Shah Deniz, all other projects are under developmental stages in Azerbaijan. Therefore, if other exploration projects conclude commercially feasible gas developments, then an aggregation all of this gas volume might help the realization of the Nabucco project.
How would you evaluate Azerbaijan’s role as an energy hub in the future?
Today, Azerbaijan exports more than 1 billion barrels of crude oil from the ACG oil project via BTC to the world. I believe that this amount will rise rapidly in the coming years depending on the country’s political relations with the world. Europe is looking at opening up gas pipeline routes via Turkey. Turkey also has a powerful determination and motivation to become an energy hub in that regard.
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