UAE-based company purchases share in Azerbaijan's Absheron gas field

The Abu Dhabi National Oil Company (ADNOC) of the United Arab Emirates, Azerbaijan’s energy giant SOCAR, and French TotalEnergies signed on August 4 a transaction that will transfer an interest in the Absheron offshore gas condensate field of Azerbaijan to the Arabic company.

The signing ceremony in Azerbaijan’s capital Baku was attended by top officials from three companies.

Once completed after relevant approvals by government structures, the transaction will fetch ADNOC a 30 percent share in the Absheron field securing purchases of 15 percent interest each from SOCAR and TotalEnergies.

Following ADNOC’s official takeover of the participating interest, SOCAR and Total Energies will hold 35 percent each at the offshore field.

 “With global gas demand expected to steadily increase over the coming decades, ADNOC will continue to responsibly meet the world’s energy needs by developing and producing natural gas from world-class assets such as Absheron,” said Musabbeh Al Kaabi, Executive Director, Low Carbon Solutions and International Growth at ADNOC.

Absheron field marks the first upstream asset in ADNOC’s investment map outside the United Arab Emirates.

Meanwhile, SOCAR President Rovshan Najaf said this particular deal reaffirms Azerbaijan’s position as a reliable partner in the energy sector. Nicolas Terraz, President at TotalEnergies, added that ADNOC has invested in a field that offers a significant further development potential to meet the growing gas demand.

The Absheron gas and condensate field is located in the Azerbaijani sector of the Caspian Sea around 100 kilometers south-east of Baku. Its operator is the Joint Operating Company of Absheron Petroleum (JOCAP).

On July 10, TotalEnergies and SOCAR announced the start of production of gas as part of the first phase of development of the field. According to the French company, the first phase enables a connection of a subsea production well to a new gas processing platform, which is plugged into SOCAR’s existing facilities in Oil Rocks industrial settlement on the Caspian Sea.

The first-phase development is churning out 4 million cubic meters of gas per day and 12,000 barrels a day of condensate. The extracted volumes are earmarked for the sales on the domestic market in Azerbaijan.

The Absheron field was discovered by Azerbaijani geologists in the 1960s. The volume of gas reserves in the field, which is the second-largest field of Azerbaijan in the Caspian Sea after Shah Deniz, is said to 350 billion cubic meters (bcm).

The first international contract on the Absheron field was signed in 1997, however, it was terminated in 2005 after failure in its development. In 2009, TotalEnergies and SOCAR renewed the work on the field’s development by signing a second contract.

In September 2011, the French company announced the discovery of large gas reserves in the offshore deposit.

The Absheron field is expected to ultimately churn out 1.5 bcm of gas per annum.

According to the estimations of the Azerbaijani authorities, the overall proven gas reserves of the country stands at 2.6 trillion cubic meters. In addition to Shah Deniz and Absheron, other notable fields with untapped potential are the “Babak” field with estimated reserves of 400 billion cubic meters and the “Umid” field with at least 200 billion cubic meters.