AZERBAIJAN - Energy & Mining
General Manager, Total
Christian Giudicelli has been the General Manager of Total in Azerbaijan since 2011, after joining from the Americas Division of Total at its Paris headquarters. He graduated from the Ecole Centrale de Paris and the Ecole Nationale Supérieure des Pétroles et Moteurs and began his career at Total as a Reservoir Engineer in an Angolan affiliate.
We have had over 15 years of history with some unfortunate trials as well as some successful ventures. It started with entry into the Shah Deniz gas field. There was also an exploration project, on the Lenkoran-Talish-Deniz block, operated by ELF, one of the companies now a part of Total, as well as a former partnership with Chevron on the Absheron block. Both Absheron and Lenkoran-Talish-Deniz turned out to be considered dry in the beginning, so we relinquished them. Shah Deniz turned into a success and we are still there. We continued studying the Absheron block and we recently took it on again. This time we partnered with SOCAR, and in September 2011 we made a successful discovery. We believe there are around 5-10 trillion cubic feet (tcf) of potential reserves there.
First, we need to evaluate the extent of the field and shoot a 3D seismic survey in 2013. After that, we will drill an appraisal well once we get access to a drilling rig. In parallel, we issued a notice of discovery and its commerciality in June 2012, and we are launching studies on the first stage of the field’s development.
The relationship is a normal working partnership. SOCAR has 40%, Total has 40%, and GDFSUEZ has 20%. The next step will be to create an operating company for future development. This means that an entity made out of Total, SOCAR, and potentially GDFSUEZ will be in charge of the development and production activities as soon as the development program is agreed upon with SOCAR. It will be a closer relationship because we will have a common entity to work through.
Total has a 10% stake in the Shah Deniz field. We aim to be a constructive partner that tries to bring our experience to the project and provide some of our know-how while working with the operator to propose improvements where we see possible. At the moment, in Phase I, we are producing something between 800 million and 900 million standard cubic feet (scf) per day. In Phase II, this is expected to increase by an additional 16 billion cubic meters (bcm) per year comprised of 6 bcm going to Turkey and 10 bcm going to the EU. Most of our activities in Shah Deniz at the moment are concentrated on Phase II development.
It terms of production, it is not that important because our equity production here is about 15,000 barrels of oil equivalent (boe) per day this year, whereas the total equity production of Total worldwide is close to 2.4 million boe per day. We project that this proportion will increase significantly when Phase II of Shah Deniz comes on stream and later when Absheron begins to produce. There are also further opportunities in Azerbaijan, such as offshore exploration, which we can contribute to and would be ready to work on if SOCAR is interested.
We bring experience and know-how, which we gained working in many other places in the world, and through significant R&D activities. Total is French, but it is a global company with international experience, and we have people from all over the world working for us. We have our own company approach to problems, and we have a management made up of people who are educated in the French system, which is known to teach an intellectual management approach different to the Anglo-Saxon one. Total has a very strong technical approach. We study every technical aspect and we believe in technology. In terms of business and relationships, we tend to favor discussion and have a belief in the value of agreement rather than confrontation. It is good for the Azerbaijanis to work with different kinds of people with different experiences so they can gain experience. We do not pretend be the best, but we try hard and we bring a novel approach to problem solving, which can be of use for Azerbaijan.
We have a small equity role of 5% in BTC and 10% in SCP, so we don’t have a major influence. BTC is of interest for us to export our liquid production from Shah Deniz and eventually from Absheron. It is also of interest because we will begin production in Kazakhstan, and we may ship some of that production through BTC one day. Regarding the SCP, it is linked to our role in Shah Deniz because we use it to export the gas from the field. It may be an export solution in the future for the gas production of Absheron. It is an asset that has significance for us. At the moment, the capacities of those pipelines are matched to Shah Deniz output, which is about 8 billion cubic meters per annum (bcma), at the moment, and 24 bcma once Phase II is completed. SCP is also the first link to the Trans-Anatolia Pipeline (TANAP) then to the South East Corridor onto Europe.
On a regional scale, it could be a route for the export of gas from Turkmenistan once that comes online. In my opinion, Azerbaijan is less of a hub and more of a source for the EU, albeit not a major one. Once Shah Deniz Phase II comes on stream, Azerbaijan will export 10 bcma to the EU. As a matter of comparison, France alone consumes about 40 bcma. The energy potential in Azerbaijan represents around 10% of the total consumption of the EU. It will play a role in providing competition and an alternative, but it will not be a dominant provider. However, this doesn’t prevent Azerbaijan from being a major provider to some countries, which would be absorbing some of its production. New exploration technology might provide Azerbaijan with the capability to produce five times as much as it exports currently, but even that will not make it the EU’s sole provider. In terms of oil, production is declining in Azerbaijan. It reached a peak just above 1 million barrels of oil per year, and it will not grow much above that. Based on 2011 statistics, in terms of production or proven oil and gas reserves, Azerbaijan’s rank is between 20th and 30th in the world. Though Azerbaijan will never be Saudi Arabia, it is an achievement.
We are integrating more and more locals into our operations. Apart from recent exploration activities, approximately two-thirds of our company is currently Azerbaijani. In 2010 and 2011, the percentage of expatriates increased because it was an exploration project, on which we needed highly specialized workers due to the various technological aspects. Since our project here has been successful, the foreign specialists are leaving and we will bring in some new people with different capabilities, we will continue recruiting Azerbaijanis, and we will also build on our present Azerbaijani employees. Total’s operations in Azerbaijan are today rather small. We have about 45 employees here in 2012. This will go down to 35 in 2013 because we will not have drilling operations. We will increase it later on once Absheron’s development speeds up.
© The Business Year – November 2012
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