Page 8 - FSUOGM Week 15 2021

FSUOGM PERFORMANCE FSUOGM

Caspian rig shortages persist

CASPIAN THE recent discovery of more gas and conden- contracted by Total for the Absheron early pro-
sate off the coast of Azerbaijan has raised hopes duction system (EPS). The rig finally became
The landlocked sea for Caspian Sea exploration. But activity will available in March 2019, but the schedule got
lacks rigs, and this has nevertheless remain subdued as a lack of rig delayed because of bad weather conditions.
traditionally slowed the availability continues to hinder drilling projects. Similarly, BP had hoped to commence drill-
pace of development. Azerbaijan’s state-owned oil company ing at the Shallow Water Absheron Peninsula
SOCAR announced in late March an ultra-deep (SWAP) block off Azerbaijan in 2019, but like-
gas and condensate discovery at the offshore wise had to wait until the Kazakhstan-owned
Shafag-Asiman block, where it is partnered Satti jack-up rig had undergone upgrades.
with BP. While neither partner has disclosed a According to BP’s latest update, drilling is
resource estimate for the find, Azeri President expected to start at some point this year.
Ilham Aliyev has hailed the result as a boost to There are reasons why the Caspian region has
the Southern Gas Corridor (SGC), the network not invested in extra rig capacity. Major discov-
of pipelines that pump Azeri gas as far as Italy. eries like the Azeri-Chirag-Gunashli (ACG) and
More information is needed to confirm the Shah Deniz fields off Azerbaijan and Kashagan
commercial value of the Shafag-Asiman dis- off Kazakhstan stand out as demonstrations of
covery. But its announcement will nevertheless the region’s significant hydrocarbon potential.
garner increased interest in Caspian Sea explo- But many wells drilled in the 1990s and 2000s
ration. It comes just over a year after SOCAR and turned up dry, sapping interest in offshore
Norwegian firm Equinor struck oil some 120 km exploration. Caspian drilling is also very costly,
off the shore of Baku at the Karabagh field. meaning that operators are unlikely to commit
No matter how much interest there is in Cas- to projects when oil prices are low.
pian drilling, though, projects take a considera- These two factors have led to long periods of
ble time to get moving. This is largely because the limited exploration activity in the Caspian Sea,
landlocked sea between Asia and Europe lacks and this has discouraged investment in extra
drilling rigs. drilling capacity. With the pandemic and the
At Shafag-Asiman, BP and SOCAR had energy transition having cast significant doubt
initially hoped to drill their first well as early as on the outlook for global oil demand, a revival
2016. But they were unable to obtain a suitable in interest in Caspian exploration is unlikely at
rig for the ultradeep borehole. The Heydar Ali- this stage. This undermines the incentive for
yev semi-submersible rig that was ultimately constructing new rigs, and rig shortages will in
used for the 7,200-metre well was commis- turn restrict how much exploration activity takes
sioned in the latter half of 2017. But it was then place even further. ™

P8 www. NEWSBASE .com Week 15 14•April•2021