U.S. shale ‘no threat’ to Azerbaijan’s gas exports

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Source: DollarPhotoClub

Azerbaijan is not concerned about the threat the U.S. shale gas revolution might pose to the country’s natural gas exports, Azeri energy minister Natiq Aliyev told Reuters on Wednesday.

“I think that shale gas won’t pose any threat for Azeri natural gas to be transported to Europe” Mr Aliyev said, explaining that although cheap and plentiful shale gas drove prices down in the U.S., high costs of liquefaction, transport, and regasification will push the prices up in Europe.

“There will be some limited competition (from U.S. shale gas), but I’d like to remind you that we signed deals with buyers of our gas (from Shah Deniz II) in Europe for 25 years, so we have already taken our place on the market,” Vitaliy Baylarbayov, deputy vice-president at Azeri state oil company SOCAR, told Reuters.

From 2019, Azerbaijan is set to send 10 billion cubic metres (bcm) of gas each year to Europe and 6 bcm to Turkey. The gas will come from Azerbaijan’s vast Shah Deniz gasfield in the Caspian Sea, which holds estimated reserves of 1.2 trillion cubic metres.

Buyers of Azeri gas from Shah Deniz II include Shell , Bulgargas, Gas Natural Fenosa, Greek DEPA, Germany’s E.ON, France’s GDF Suez, Italian regional utility Hera Trading, Switzerland’s AXPO and Italy’s Enel.

Apart from the conventional resources, Azerbaijan also has its own rich shale energy deposits, although their exploration is not among the country’s priorities.

“Shale gas fields are located at the territory of Gobustan, Shemakha and other regions. Such companies as ConocoPhilips, Statoil and others have already proposed us to start joint operations on shale gas production. Now we are estimating all proposals”, – Khoshbakht Yusifzadeh, the First Vice President of The State Oil Company of Azerbaijan (SOCAR) said at the Caspian Oil & Gas Conference in Baku on Thursday.

Vitaliy Baylarbayov, SOCAR deputy vice-president said in an interview with Reuters: “We are exploring shale gas production potential, but I don’t think we’ll start its production in Azerbaijan any time soon”.

Yusifzadeh said.

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