BAKU

Azerbaijan has started production of natural gas at the East-South flank of its major Shah Deniz II field, a move that will significantly increase the output of a project conceived to reduce Europe’s dependence on Russian gas.

Starting production from the East South flank was a major milestone planned for 2021 and achieved safely and on schedule, the BP-led consortium which develops the Shah Deniz project said.

Gas has been pumped from the offshore Shah Deniz field’s first phase since 2006, delivering more than 10 billion cubic metres (bcm) a year of the commodity to Azerbaijan, Georgia and Turkey. The second phase started output in 2018, adding 16 bcm of gas production capacity at its peak to bring total capacity to 26 bcm.

The new East-South production flank consists of four wells, two new flowlines and a number of subsea structures. The flank is expected to reach full production rates in the third quarter of 2021.

“This is the biggest milestone we had planned to achieve in Shah Deniz this year and we are very proud to have achieved it safely, on schedule and within the budget despite the challenges and restrictions caused by the covid-19 pandemic,” Gary Jones, BP’s regional president for Azerbaijan, Georgia and Turkey, said.

Azerbaijan started supplying commercial natural gas to Europe from the second stage of the Shah Deniz project via its $40-billion Southern Gas Corridor in December 2020, when the corridor’s last part, the Trans-Adriatic Pipeline (TAP), became operational. Europe,  is a highly lucrative new market for Azerbaijan, as the continent is seeking to diversify its supply away from Russia, on which it still depends for 34 percent of its gas.

A total of 400 million standard cubic feet (90,000 barrels) of gas per day will be added to current production levels, enabling Shah Deniz II to increase overall production to well over 2.4 billion standard cubic feet per day.

Azerbaijan’s goal is to eventually supply the European market with 10 bcm of gas a year, including 8 bcm to Italy and a combined 2 bcm to Greece and Bulgaria. This year, the country plans to export 5 bcm to Europe and over 12 bcm to Turkey.

Apart from BP and Azerbaijan’s state energy firm SOCAR, participants in the Shah Deniz consortium are Turkey’s TPAO, Malaysia’s Petronas, Russia’s Lukoil, Iran’s NICO and SGC Upstream.

To date, the field has produced more than 140 bcm of gas and more than 33 million tonnes of condensate.