Energy in Azerbaijan

[Mher]

Re: Energy in Azerbaijan

They know they are in trouble.....at this rate I don't see them doing anything about it. Maybe they count on finding more energy under the Caspian sea with Israeli and US technology.

They've searched extensively since 1994 with no results. Oil companies put in a lot of time and resources, specially early on since they though there was a good chance there was more, and there hasn't been any. If there was any, you could have been sure oil companies would have made sure to find it when oil was $135 before the recession. It's pretty much assumed at this point that there is no more. Also finding oil off shore is many times more expensive than on shore, so at some you need to cut you're losses if you think you're unlikely to find anything. Almost their entire production comes from one source, Azeri-Chirag-Guneshli , which accounts for 80% of production.

I think referring to oil reserves or production levels is flawed analysis without considering the cost of extraction.

Most of the Azeri fields are offshore which by definition is more expensive than onshore to extract.

The deeper these fields the higher the extraction costs.

Also as the well approaches its later stages of its usefulness it gets more expensive to extract the remaining oil,
typically they pump water at high pressure etc. to move the stuff out.

I wish we had these figures to give us a truer picture.

A good example is Venezuela.
They have one of the largest oil reserves yet their economy is in trouble because of the higher cost of taking the stuff out in conjunction with falling prices.

A lot of good points that don't get much attention. You can never get reliable data from authoritarian governments, specially when the real data can make them look bad. One thing to add to the points you made, this was in a report last year: When they built the offshore facilities in Azerbaijian, oil was trading at under $20/barrel. So naturally, compared to today, they spent a lot less on the facilities and infrastructure in terms of assuring efficiency and longevity. This was the only way it was feasible to get a return on the investment, since they had no way of knowing Bush would invade Iraq and oil would be $135/barrel 10 years later. Well now, those facilities are very outdated and hurting output. However because a majority of the oil is gone, and there's a few more years left, it's not going to be profitable to totally upgrade the systems.

One more basic aspect of this conversation that's not often considered. We pay attention to the fact that oil has dropped 35% in price in recent months. But that's not the change in profit. There's a base break-even price that is the cost of each barrel produced, below which production is losing you money. This cost includes the extraction cost and the return for the initial investment by the oil companies. So let's say that cost is $25/barrel for Azerbaijan. If the price of Oil has dropped from $105 to $70 dollars, your profit has gone $80 dollars to $45 dollars. So though the final price has decreased by a third, your actual loss of profit is about 45%.

[Eddo211]

Re: Energy in Azerbaijan

They've searched extensively since 1994 with no results. Oil companies put in a lot of time and resources, specially early on since they though there was a good chance there was more, and there hasn't been any. If there was any, you could have been sure oil companies would have made sure to find it when oil was $135 before the recession. It's pretty much assumed at this point that there is no more. Also finding oil off shore is many times more expensive than on shore, so at some you need to cut you're losses if you think you're unlikely to find anything. Almost their entire production comes from one source, Azeri-Chirag-Guneshli , which accounts for 80% of production.
.

I think there is oil down there but its too deep and not at large volumes and like Londondsi said its not worth going for it with today's technology it will cost more than profit. Some are not even reachable with today's equipment.

[Mher]

Re: Energy in Azerbaijan

OPEC revises Azerbaijan’s oil output figures

in Oil & Companies News 13/12/2014
azerbaijan-flag.jpg

OPEC believes Azerbaijan’s oil output will amount to on average 0.86 million barrels per day (bpd) in 2014.

OPEC’s December oil market report said the figure indicates a decline of 10,000 bpd from 2013 and a downward revision of 10,000 bpd from OPEC previous month’s report.

The revision was due to lower production in September, which was down by 10,000 bpd, and it continued into October.

During the first three quarters of 2014, Azerbaijan’s supply decreased by 20,000 bpd from the same period in 2013.

On a quarterly basis in 2014, Azerbaijan’s oil supply is estimated to average 0.85 million bpd, 0.87 million bpd, 0.86 million bpd and 0.85 million bpd, respectively.

OPEC forecasts Azerbaijan’s average oil output at 0.8 million bpd in 2015 with the highest production level of 0.9 million bpd in the first quarter.

According to British BP’s estimations, Azerbaijan’s proven oil reserves amounted to 7 billion barrels as of early 2014. Oil production in the country amounted to 0.931 million bpd in 2013.

The main part of oil of energy-rich Azerbaijan is extracted from giant Azeri-Chirag-Gunashli block of fields in the Caspian Sea.

Since the beginning of development of the field around 345 million metric tons of oil and 100 billion cubic meters of gas have been extracted.

In 2013, Azerbaijan produced some 43.15 million metric tons of oil. The government expects the oil production in the country to reach about 40.62 million metric tons in 2015 compared to 41.65 million metric tons projected for 2014.
Source: Azer News

http://www.hellenicshippingnews.com/opec-revises-azerbaijans-oil-output-figures/

__________________________________________________ _____________________________
That's a seven percent projected drop in annual production compared to this year
that is in addition to the current massive reduction is price
the end is near for sultan aliyev

[Federate]

Re: Energy in Azerbaijan

Merry Christmas Armenia. Though the Sultan will be at its most dangerous in these times, we need to be cautious. With oil going bust, he's going to need to rally people around the flag and what better way to do it than to launch an attack on us.

[Mher]

Re: Energy in Azerbaijan

Merry Christmas Armenia. Though the Sultan will be at its most dangerous in these times, we need to be cautious. With oil going bust, he's going to need to rally people around the flag and what better way to do it than to launch an attack on us.

Unfortunately all signs point to that. It almost seems inevitable. If he thinks he's going down, regardless of how confident he is about his chances, what does he have to lose with war? With the economy and civil society falling apart, its the last card he has to play. If he comes up on top and takes Artsakh, his people will give him another ten years. That's why I think it was important for Armenia do what it needed to, to appease Russia and be as prepared as possible.

[Hakob]

Re: Energy in Azerbaijan

Unfortunately all signs point to that. It almost seems inevitable. If he thinks he's going down, regardless of how confident he is about his chances, what does he have to lose with war? With the economy and civil society falling apart, its the last card he has to play. If he comes up on top and takes Artsakh, he's people will give him another ten years. That's why I think it was important for Armenia do what it needed to, to appease Russia and be as prepared as possible.

Absolutely correct.
Falling to Euro/US promises and rejecting EEU deal would put Armenia in a grave danger.
As some political scientinsts observed, EEU issue is a strategic security issue for us. We are going to have to take all the blows coming from collapsing russian ruble or stagnating economy for the sake of keeping Russia aligned with us for their own security.
I heard an interesting comment yesterday, after dow jones fell 315 points, that low oil prices were somehow affecting US economy badly too. The overstock in world oil supplies indicates of world economy slowdown. No matter how they sunction russia, it's going to affect western economy too.
Let's hope, they won't go too far with that.
There is a point, at which EU or EEU does not make much diffrence economically or even socially(examples of Ukraine, Moldova, Bulgaria, Hungary etc. for democratic or lifestile improvements), for us. The big diffrence is security. Let's not forget that.

[Eddo211]

Re: Energy in Azerbaijan

Merry Christmas Armenia. Though the Sultan will be at its most dangerous in these times, we need to be cautious. With oil going bust, he's going to need to rally people around the flag and what better way to do it than to launch an attack on us.

I wonder if our leaders contemplate a preemptive strike when an Azeri attack is eminent on Artsakh......this time Armenia needs to finish this conflict and we can, we have become much stronger.

[Tsov]

Re: Energy in Azerbaijan

Azerbaijan reveals oil and gas output figures
in Oil & Companies News 15/12/2014

Energy-rich Azerbaijan produced 38.4 million metric tons of oil and gas condensate in January-November 2014. This figure amounted to nearly 39.5 million metric tons in the same period of 2013, Azerbaijan’s State Statistics Committee said. Azerbaijan produced 43.1 million metric tons of oil and gas condensate in 2013, compared to 42.98 million metric tons in 2012. The committee went on adding that in the reported period Azerbaijan produced around 17 billion cubic meters of commercial gas, which stood at 16.2 billion cubic meters in the same period of 2013. Azerbaijan produced 17.9 billion cubic meters of commercial gas in 2013, compared to 17.24 billion cubic meters in 2012. The major part of Azerbaijan’s natural gas is produced from giant Shah Deniz gas condensate field in the Caspian Sea. The proven gas reserves hit 2.3 trillion cubic meters in Azerbaijan, but when it comes to the projected reserves, the figure can reach six trillion cubic meters. It is expected that the volume of gas production in Azerbaijan will reach 30.2 billion cubic meters in 2018, compared to 28.42 billion cubic meters forecasted for 2014. Source: Azernews

http://www.hellenicshippingnews.com/azerbaijan-reveals-oil-and-gas-output-figures/

[Mher]

Re: Energy in Azerbaijan

I wonder if our leaders contemplate a preemptive strike when an Azeri attack is eminent on Artsakh......this time Armenia needs to finish this conflict and we can, we have become much stronger.

Absolutely. If the Armenian Army decides war is around the corner, we have to strike first. With that said, hopefully Azerbaijan gets to a point of realizing victory is not realistic, and we don't deal with the consequences of war.

Heres a comparison of the two sides in 1993-94 at the height of the war:
Azerbaijan: 436 tanks, 558 infantry fighting vehicles, 389 armored vehicles, 388 artillery systems, 63 aircraft, 8 helicopters
Armenia: 77 tanks, 150 infantry fighting vehicles, 39 armored vehicles, 160 artillery systems, 3 aircrafts, 13 helicopters

If we managed to come out victorious with that discrepancy on even ground, I can't imagine how Azerbaijan believes it will win with Armenia having the higher ground and a relative military balance.

Azerbaijan reveals oil and gas output figures
in Oil & Companies News 15/12/2014
http://www.hellenicshippingnews.com/...utput-figures/

Interesting information.
their hopes of gas replacing oil is just a dream. Gas revenue is a fraction of oil revenue, and they don't have nearly enough to replace oil.

[londontsi]

Re: Energy in Azerbaijan

Interesting information.
their hopes of gas replacing oil is just a dream. Gas revenue is a fraction of oil revenue, and they don't have nearly enough to replace oil.

I wonder if these figures look in the future.

It has to be expected that there are variables and risks.
However I think it would be wrong to discount Azerbaijan's income from energy resources in the foreseeable future.

The above article does not consider Shah Deniz Stage 2 which is anticipated to come on line in 2017 and onward.
Probably it was referring to Shah Deniz Stage 1 output figures.

http://www.eia.gov/countries/cab.cfm?fips=AJ

Exploration and production

The Shah Deniz field, discovered in 1999, is one of the world's largest natural gas and condensate fields. Shah Deniz Full Field Development is expected to have peak capacity of 565 Bcf (in addition to the 315 Bcf in Phase I), making it one of the largest gas development projects anywhere in the world.

Almost all of Azerbaijan's natural gas is produced in two offshore fields—the ACG complex and Shah Deniz. The Shah Deniz natural gas and condensate field started producing in late 2006, making Azerbaijan a net gas exporter. The ACG field provides associated gas to the Azerigaz system for domestic use via an undersea gas pipeline to Sangachal Terminal at Baku. The Sangachal Terminal, located south of Baku, is one of the world's largest integrated oil and gas processing terminals. It receives, stores, and processes both crude oil and natural gas from the ACG fields and from Shah Deniz, then ships these hydrocarbons through the South Caucasus Pipeline (SCP) for export.

The Shah Deniz field, discovered in 1999, is one of the world's largest gas and condensate fields. According to BP, the operator of the development, it has approximately 40 Tcf of natural gas in place. It is located on the deep water shelf of the Caspian Sea, in water depths of up to 1,600 feet. According to BP, the field produced about 346 million cubic feet per day of natural gas and about 53,740 bbl/d of condensate in 2013.

Shah Deniz Stage I development includes a fixed offshore platform, two subsea pipelines to bring the hydrocarbons ashore, and a new onshore gas-processing terminal adjacent to the existing oil terminal at Sangachal, near Baku. According to BP, since the start of Shah Deniz production in late 2006 until the end of 2013, Shah Deniz produced about 1.7 Tcf of natural gas and 100 million barrels of condensate.

Shah Deniz Stage 2, or Full Field Development (FFD), will have peak capacity of 565 Bcf (in addition to the 315 Bcf in Phase I) according to BP, making it one of the largest gas development projects in the world. Operators expect it to start producing in 2017 and supply European markets with natural gas in 2019. The development of Shah Deniz FFD is currently in the front-end engineering and design (FEED) phase. Transportation of Shah Deniz gas from the Caspian Sea to Europe will require enhancement of the existing pipelines and development of new infrastructure.