Total, Socar Reach Absheron Deal
Monday 21 November 2016
Total and Socar have reached a deal covering the first phase development of the Absheron gas and condensate field in Azerbaijan's section of the Caspian Sea.
French supermajor Total said on Monday that the pair had signed an agreement "establishing the contractual and commercial terms" over first phase production at the high-pressure field, discovered by Total in 2011.
A statement from Socar in Azerbaijani made reference to a framework agreement penned between the partners but was not specific about Absheron or other ventures, with no details given.
Neither Total nor Socar mentioned any expected date of first gas from Absheron, which has been a significant bone of contention of late as the parties have discussed development plans.
However, Upstream understands that first gas is expected in 2019 or 2020, with a final investment decision set for next year.
Development will involve drilling of a single well in 450 metres of water, with production expected to be 35,000 barrels of oil equivalent per day of water - which includes "a significant portion of condensate", Total said.
The gas will be used for the domestic market. The first phase will also allow for appraisal of the field for future possible phases.
Total chief executive Patrick Pouyanne said: "I’m delighted with this agreement, which we sign on the occasion of the 20th anniversary of Total’s presence in Azerbaijan, and which represents an important step to monetise the Absheron discovery.
"This agreement was made possible by the close co-operation between Total and Socar, which has allowed us to design a cost-competitive development scheme by tying the field to existing infrastructure in order to deliver gas at a competitive price."
Total and Socar have been locked in talks recently about Absheron, with the main sticking point believed to be the price of gas to be sold into the domestic market. Monday's agreement appears to have resolved that issue.
Socar officials have recently expressed hope that the field could see first gas in the third or fourth quarters of 2019. However, Total has previously said production could start in 2021 or 2022.
Total operates Absheron on 40%, with Socar also on 40% and French player Engie on 20%.