OBG talks to Rövnag Abdullayev, President and CEO, SOCAR

Interview: Rövnag Abdullayev,

How has SOCAR’s Trans-Anatolian Natural Gas Pipeline (TANAP) affected the competition to transport Azerbaijani natural gas to Europe?

ROVNAG ABDULLAYEV: The way I see it, TANAP is not competing with other projects in the region; it is just an alternative to projects aimed at reducing the natural gas shortages in Turkey and the EU. The aim of this project is to transport Azeri gas, produced in Shah Deniz II and other Azeri reservoirs, to Turkey and then to Europe by the end of 2017 at the latest. Azeri natural gas can and will be supplied to Europe along the most cost-efficient path, ensuring price competition and diversification of gas supplies for Europe.

This is a very important project for Azerbaijan, since the government regards the TANAP project to be equal in significance to the Baku-Tbilisi-Ceyhan (BTC) oil pipeline for Azerbaijan’s national development. The gas pipeline, headed for South-east Europe, will mark Azerbaijan’s emergence as a significant gas exporter in its own right, adding to the country’s role as a major oil industry player in the region.

What is the outlook for gas production, especially from Shah Deniz II field, and how much of the new gas is going to be allocated for European end-users?

ABDULLAYEV: The transit line’s capacity is projected at 16bn cu metres annually in the first stage. Of that amount, Turkey will be entitled to buy 6bn cu metres annually from Shah Deniz II during phase two of production (from 2017 onward). We expect to add significant gas volumes from other fields for export to Europe. TANAP will run from the Georgia-Turkey border to the Turkey-Bulgaria border, and then connect with another pipelines going into EU territory.

What potential do you see for the various Southern Corridor projects to work in cooperation?

ABDULLAYEV: Currently, there are many projects being undertaken in the region, with both political and economic objectives. The Trans-Adriatic Pipeline is on its way, and there are a number of new projects in the works as well, with TANAP coming into the picture alongside Nabucco. However, it is important that countries and companies find common ground and work towards solutions to achieve the goal of providing a reliable gas supply to Europe in the coming years.

As demand in Turkey rises, how likely is it that greater quantities of gas will be reserved for Turkey?

ABDULLAYEV: Azerbaijan is the most significant gas supplier within the Southern Gas Corridor at the moment. It is ready to transport approximately 10bn cu metres of gas to Europe with TANAP, with full capacity expected to reach 16bn cu metres. However, there is a chance that this volume can be increased, offering the possibility to supply greater quantities of gas to additional countries, including Turkey. The recently discovered Absheron and Umid gas fields present just this opportunity. Furthermore, deep gas is expected to be obtained from the Azeri-Chirag-Guneshli block of fields in the future. In addition to this, other sources of gas can be transported via Azerbaijan to Turkey and to Europe.

Turkey and Azerbaijan have had historically close ties. How important is this relationship for the future of petroleum projects in the region?

ABDULLAYEV: The long history of mutual friendship and bilateral relations between Azerbaijan and Turkey is one of the main drivers behind the close cooperation in the energy field between two countries. Turkish companies have been actively involved in major oil and gas projects in Azerbaijan since the country achieved independence. Hence, the biggest investment plans of SOCAR are and will remain closely related to the Turkish oil, gas and petrochemicals sectors.

With the BTC and South Caucus Pipeline projects, SOCAR has built a solid foundation with a bright outlook for oil production in the country. We expect to continue playing an active role in Turkey’s energy security.