Jan. 5, 2015


Denis Lemarchal

Azerbaijan

Denis Lemarchal

Managing Director & Chief Representative in Azerbaijan, Total

"I think SOCAR selected Total for its technical skill in terms of geosciences."

BIO

Born in 1958, Denis Lemarchal graduated from the Institut National Polytechnique de Toulouse. After one year at the French Agency for nuclear energy, Denis Lemarchal joined his current firm in 1982 and started as a Process Engineer in the E&P direction. Having occupied a number of senior positions, he is currently Managing Director & Chief Representative in Azerbaijan at the firm.

What can you tell us about Total's latest developments in Azerbaijan?

At the moment, the Absheron Gas Field is our only operating asset and, in that field, the final investment decision (FID) has not yet been made, which means that we are conducting project definition studies and preparing for future development. Our main activity for 2014 has been preparing the development program to be submitted to SOCAR by mid-2015. We also sold our share in Shah Deniz Gas Field in order to concentrate on our Absheron asset. It is part of the global policy of Total, in terms of asset management; we want to concentrate on assets where we have an industrial role, where we are the operator, or have a significant input in the operations; and, which are more profitable. Based on these criteria, as we had 10% in Shah Deniz, we felt that it was better for us to concentrate our resources and capital on Absheron. We also participate in the Baku-Tbilisi-Ceyhan (BTC) Pipeline for oil transportation. This is a strategic asset for us as it unlocks some reserves by allowing oil or condensate export. For example, Absheron is a gas field with condensate, and BTC is a good option for exporting the liquid. This is not only for Azerbaijan, as we will eventually export from our production facilities in Kazakhstan through the BTC Pipeline. The fact that the BTC Pipeline is not yet full is an opportunity in oil development in the area.

Total has a 40% stake in Absheron and SOCAR also has 40%. How do Total and SOCAR support each other in this relationship?

I think SOCAR selected Total for its technical skill in terms of geosciences, our ability to handle megaprojects within budget and on schedule, and our deep-sea technology expertise. The concept that led to the discovery of Absheron was quite innovative. Before Total took the operatorship, a first exploration well was drilled in the area, but this well did not lead to a commercial discovery, although there it evidenced some hydrocarbon traces. Our geologists had to develop a very original scenario to identify another prospect in the area: it was validated by an exploration well drilled in 2011. There are several good operators in terms of technical skills, but I believe we are among the top players in terms of geoscience. We are clearly a pioneer in terms of deep-sea technology in places such as the Gulf of Guinea, where we started oil production in water depths of 1500m in 2001; we have many subsidiaries tackling deep-sea operations. I was personally in charge of Block 17 in Angola, which is one of the more prolific blocks in the Gulf of Guinea. We had four big sea developments that we can really be proud of there. I think that is one of the main drivers from SOCAR. They have good technical capacity and we are sharing our experience to continue deep-sea development. We are progressing very efficiently with SOCAR.

“I think SOCAR selected Total for its technical skill in terms of geosciences."

What are the major preparations that need to be done in order to reach the objective of starting gas production at Absheron by 2021?

We have several axis. One is drilling rig development, as there is a shortage of rigs here. SOCAR realized that some time ago and decided to construct a new rig, which should be available in early 2017. One way to accelerate drilling would be to use this rig because it would avoid having to wait for the second rig, which the construction on is not decided yet. There is another possibility of accelerating the schedule of our project by using the oil and gas processing and petrochemical complex (OGPC) facilities. This option requires some arbitration, as the design will integrate the specificity of the Absheron fluids. We are in close contact with SOCAR and OGPC to progress this option. Last but not least we need to define a solid marketing plan and to reach an economical balance before being in position to submit a robust Development Program and later on to reach the Final Investment Decision.

Looking at Total's operations globally, how significant are operations in Azerbaijan in terms of the global strategy?

The operation in Azerbaijan is limited for the time being; however, the Absheron prospects are very good. It is a major project with a significant investment. If we succeed in creating a good development plan that will be approved by SOCAR for Absheron, then the logic will be to continue with other phases of Absheron and with other offshore developments. It should be the beginning of a successful story.

Oil and gas from Azerbaijan is becoming more important on a global scale. How do you expect this to affect the hydrocarbon sector within Azerbaijan?

The first stage of development in Azerbaijan was based on oil. The Azeri-Chirag-Guneshli (ACG) Field was the basis for this development. I think the focus on gas, which has both political and technical aspects in the southern gas corridor project, is clearly very important in terms of national strategy. It may offer some perspective for gas development, which means more activity for the country, which should contribute to national development.

How much do you think Total's presence in Azerbaijan is strengthening ties between France and Azerbaijan?

We are not involved in gas distribution in France. It, however, appears that having a corridor that allows for the transportation of energy from the Caspian to Europe, including France, is a positive aspect in the relationship. In terms of operations here with Absheron, it is not only a French company working in Azerbaijan. Total-Azerbaijan is an Azerbaijani entity and we are here to work with Azerbaijan to develop the people, to share our technology, and to develop the difficult fields. This is the most important part of the relationship.

What are the long-term goals of Total in Azerbaijan?

The objective is to become an important player in oil and gas operations in Azerbaijan. We have Absheron, and hopefully we will have other opportunities in the future to move in this direction. The goal is to create something sustainable in Azerbaijan. We still have to build some conditions to secure the development of Absheron but we are in a very positive working relationship with SOCAR. I am quite optimistic about our shared success.

© The Business Year - January 2015

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