THE PEAK OF PRODUCTION

The British oil and gas giant BP, which is the operator of the Azeri-Chirag-Guneshli [Azari-Ciraq-Gunasli] (ACG) and Shah Deniz [Sah Daniz] projects, as well as the Baku-Tbilisi-Ceyhan oil pipeline and the South Caucasian gas pipeline, in abiding by a policy of maximum transparency in its activities on a global scale, is also following it systematically in relation to Azerbaijani projects. For several years now the company has been publishing a report on steady development in Azerbaijan in which it discloses key information about projects in the country. A lot of attention is being focused on the preparation of the document because these statistics and figures are closely followed both inside the country and abroad. In the compilation of this report, which is upgraded and amplified annually, due regard is taken of public opinion, including that of the journalists covering achievements in the oil and gas sector.

Shah Deniz is the leader

According to BP's report, a clear example of the success achieved in developing the ACG and Shah Deniz fields is the fact that, according to last year's results, three field wells at Shah Deniz occupied leading places in the list of the 29 most productive. Two other wells at Shah Deniz occupied sixth and ninth places in the list. Three wells from the ACG block were also in the list of the most productive.

As Tamam Bayatli, head of BP-Azerbaijan's public liaison department, said during a discussion of the report, the wells at Shah Deniz, one of the world's largest gas-condensate fields, are showing very good results. "That is why they are at the top in the list of BP's most productive wells," she stressed. According to the report, 47.3bn cu m of gas and 99.5m barrels of gas condensate were produced from 2006 to 2013 from Shah Deniz, where proven gas reserves are estimated at 1.23 trillion cu m. 

Moreover, the plans for the further development of Shah Deniz give reason to hope that in the long term the wells at the field will be among the world's most productive, and not just according to BP's statistics. This claim can be made based on forecasts that as part of the second stage of the development of the field, annual production volumes there will increase by 16bn cu m annually from the current 9-9.5bn.

The significance of Shah Deniz, not just for BP and the Azerbaijani economy, but for Europe, too, may also be judged by the plans for the export of gas to countries of the Old World. The Southern Gas Corridor is a project which enables Europe to diversify its sources of supply of hydrocarbons and enhance energy security and Azerbaijan to acquire a new market in the shape of Europe. According to Azerbaijan's Energy Minister, Natiq Aliyev, the volume of investments in stage two of the development of the Shah Deniz gas-condensate field, as well as the expansion and creation of the gas transportation infrastructure in Azerbaijan and Turkey, are estimated at 46.5bn dollars.

As part of stage two of the development of the field, gas will be exported to Turkey and the markets of Europe by way of the extension of the South Caucasian gas pipeline and the construction of the Trans-Anatolian (TANAP) and Trans-Adriatic (TAP) gas pipelines. It was revealed recently that, as part of the Southern Gas Corridor project, a consultative group is being created, consisting of three members - former British Prime Minister, Tony Blair; former German Foreign Minister Hans-Dietrich Genscher, and the chairman of the Goldman Sachs investment bank, Peter Sutherland, who was previously chairman of BP. According to one source, the consultative group is being created by 11 companies involved in the Southern Gas Corridor, including BP, SOCAR and Statoil, providing consultations on political, social and ecological questions. The group is being created as a private, "internal" consultative body and will deal with non-technical risks. The group's discussions will not be made public.

Investments for development

Meanwhile, the report published by BP on steady development in Azerbaijan contains a good deal about another interesting statistic. The document states that the volume of capital expenditure on projects in the country from 1995 to 2013 was 43.1bn dollars. In the period from 1997 to 2013 2.3bn barrels of oil were produced from the ACG block. Projects in Azerbaijan are responsible for 11per cent of BP's oil production in the whole world.

This volume of capital expenditure incorporates just three projects. But along with these, work is also being carried out in the country at other oil and gas facilities, for the development and implementation of which investments have also been directed.

As has been noted, the implementation of large energy projects requires a large amount of investment, but they are all backed up by high performance and earning power, thus ensuring the consistent development of the country's economy. For example, according to the figures of the State Oil Fund of Azerbaijan (SOFAZ), in which revenue from the sale of oil and gas in the country is accumulated, as of 1 July 2014 (from the beginning of 2001), SOFAZ had received 102.8bn dollars as part of the ACG project. In turn, SOFAZ has received 1.89bn dollars from the implementation of the Shah Deniz project since 2007.

The main objectives of the State Oil Fund are the accumulation of funds and the allocation of the fund's assets abroad in order to minimize the negative impact on the economy, to prevent to a certain extent a "Dutch disease", to ensure an accumulation of funds for future generations and to support the current socio-economic processes in the country. This is what has enabled Azerbaijan to avoid the negative impact of the large flow of petrodollars and to provide steady economic development through the use of funds obtained from the development of oil and gas resources for the construction and reconstruction of strategically important infrastructure facilities, and also to resolve important nationwide problems. As Azerbaijani President Ilham Aliyev said recently, "We have long since ensured our energy security and today we are playing our part in ensuring the energy security of other countries. This is a positive role and our partners appreciate it".