Page 5 - FSUOGM Week 32 2019

FSUOGM COMMENTARY FSUOGM
Buried Hill, it is geologically similar to BP’s super-giant Azeri-Chirag-Deepwater Gunashli (ACG) project o Azerbaijan, and could yield 300,000 barrels per day (bpd) of oil, subject to exploration results. e company is hoping to farm out a 50% stake in the block to an inter- national oil major, having reportedly held talks with France’s Total. However, this all depends on whether Azerbaijan and Turkmenistan can strike a deal on joint development. Turkmeni- stan is known for its reluctance to engage con- structively with its Caspian neighbours, though, making compromise unlikely.
e same can be said for the disputed explo- ration acreage o Turkmenistan. And even if disputes with Azerbaijan and Iran are resolved, long-standing problems with Turkmenistan’s investment climate are likely to impede develop- ment. e country has been unable to advance any new projects beyond those developed by Malaysia’s Petronas and UAE-based Dragon Oil in the late 1990s and early 2000s. Turkmeni- stan’s authoritarian political system and aspects of its state-managed economy have presented barriers to foreign investment. Investors have also encountered difficulties with red tape, corruption and the government reneging on commitments.
ere have been some signs of progress at the Alov block, where Iran’s NIOC and Azerbaijan’s SOCAR signed a memorandum of understand- ing (MoU) on joint explored work in May 2018, along with additional accords later that year. However, Iran’s involvement in the project will make it near impossible to secure the foreign investment, expertise and technology necessary to develop the deepwater site, as long as Wash- ington continues ratcheting up sanctions on Tehran.
Other talking points
Determining ownership of resources in the Cas- pian is therefore unlikely to have any signi cant
impact on exploration and production. Mean- while, all eyes are on Russia and Iran – the only littoral states that are yet to ratify last year’s convention. Attending the forum, Russian Prime Minister Dmitry Medvedev said rati- fication was anticipated “in the near future”. Iranian Vice-President Eshaq Jahangiri, who also spoke at the event, did not make any such commitments.
Separately, Azerbaijan and Turkmenistan have not announced any progress on developing a trans-Caspian gas pipeline. Ashgabat has pre- viously suggested building a 30bn cubic metre per year pipe that could pump gas to southern Europe via the Southern Gas Corridor (SGC) network. Under last year’s convention, the pair do not need permission from other littoral states to implement the plan. But the project faces other challenges, including high delivery costs, SGC capacity constraints and the increasing reluctance of European buyers to purchase gas under long-term contracts.
There is speculation that Russia’s resump- tion of gas purchases from Turkmenistan earlier this year was aimed at deterring Ashgabat from pursuing trans-Caspian gas exports, which could compete with Russian supplies in Europe. Meanwhile, Russian oil and gas companies Gaz- prom, Rosne and Lukoil have expressed inter- est in entering Turkmenistan’s upstream sector, a senior government o cial told reporters at the Turkmen forum.
“Interest in developing oil and gas elds in Turkmenistan was shown by Rosneft, Lukoil and Gazprom,” Sergei Prikhodko, the rst dep- uty chief of the Russian government’s o ce, was quoted as saying by TASS on August 12. While eager to attract foreign investment to its o shore zone, Turkmenistan has restricted access to its proli c onshore oil and gas resources to a select few operators. Prikhodko’s statement suggests Moscow is pressing Ashgabat to rethink this policy. ™
Week 32 14•August•2019 w w w . N E W S B A S E . c o m P5