Page 14 - FSUOGM Week 49 2022

FSUOGM NEWS IN BRIEF FSUOGM

Oil price cap scheme is India justifies its continued imports from president Serdar Berdimuhamedov and
Ilham Aliyev, the president of Azerbaijan,
threatened as Russia on course Russia as part of a long-term strategy to which lies across the Caspian Sea from
diversify its imports. China has also long
Turkmenistan, in the Caspian resort town of
to become India’s biggest followed a diversifying policy of limited Awaza on December 14.
If realised, the gas transportation project
suppliers for 15% of its needs, although it
supplier has breached those norms this year to take would mean carrying Turkmen gas on ships
to Azerbaijan and then pumping it into
advantage of the deep discounts that Russia
Russia is on course to become India’s top oil has been offering. the Southern Gas Corridor (SGC) chain of
supplier in December after shipments to the pipelines that stretch from Azerbaijan to
country soared in November and are likely Southern Europe via Georgia and Turkey,
to increase going forward. TotalEnergies to pay $21mn to the quoted officials, who spoke on condition
Notably, India has opted out of of anonymity, said.
participating in the West’s oil price cap SOFAZ in 2023 As Kazakhstan, which has plans to
scheme that came into force in Europe export more of its gas via Azerbaijan’s
on December 5. The mechanism, which The State Oil Fund of Azerbaijan pipelines, has found out, the Caspian Sea
is designed to cut Russia off from its oil (SOFAZ) predicts that in 2023 it will route for gas exports is undermined by
revenues, is enforced by sanctioning receive a $20.8mn bonus from the French a distinct lack of oil tankers that ply the
shipping that carries oil at contract prices TotalEnergies in connection with the start inland body of water. Plans to establish
higher than the current cap price of $60 per of production at the Absheron gas field. a trans-Caspian pipeline have come to
barrel. "Next year SOFAZ's revenues in the form nothing over the years, with Russia, another
India has chosen to recognise Russian of a one-time bonus from TotalEnergies state that borders the Caspian Sea, wary of
insurance for shipping, which dodges are envisaged at the level of $20.8mn. The any such initiative moving forward, given
the cap mechanism. Moscow has already company will pay them 30 days after the the competition it would generate versus
successfully replaced all the oil exports to start of production at the Absheron field," a Russian gas exports. Turkmenistan has
Europe, which have fallen by half this year source in the government said. the third largest gas reserves in the world
to about 2.5mn barrels per day (bpd), with Azerbaijani President Ilham Aliyev said behind Iran in second place and Russia in
new exports to India and China. on November 25 that it is planned to start first. Its proved gas reserves amounted to
Early this year China overtook Germany gas production at the Absheron field in around a third of Russia’s, at 13.6 trillion
as Russia’s biggest single customer for oil, the Caspian in 2023. The Absheron field cubic metres as of end-2020, according to
but now India looks like it will overtake is being developed by the Joint Absheron BP.
China for that title. Petroleum Operating Company (JOCAP), Turkey, at the crossroads of Europe and
Indian imports of Russia oil have established by SOCAR Absheron (50%) and Asia and bordering the Black Sea, has for
exploded this year from almost nothing last TOTAL E&P Absheron (50%). The contract years worked to develop gas transit projects
year and will top 1mn bpd by the end of this was signed for a period of 30 years. The that would make it an essential gas hub
year, according to data retrieved from the contract area is 747 km2. for Europe. A decision has already been
commodities tracking firm Kpler. The Absheron block is located 100 km made to double the capacity of the Trans-
Kpler reports that oil loadings hit a peak from Baku at a depth of 500 meters. In Anatolian Natural Gas Pipeline (TANAP),
in November as refiners purchased more 2019, SOCAR and TOTAL completed the through which Azerbaijani gas from giant
than 1mn bpd. However, that spike may drilling of the production and appraisal well Caspian Sea gas fields flows across Turkey
only be due to the 45-day grace period "ABD-001" with a depth of 7,411 meters for domestic use and further export to
on the embargo: taking into account the at the Absheron field. The field's reserves Europe, to 32bn cubic metres/year.
time it takes for tankers to travel to their amount to 350-360 bcm of gas and 100mn The EU, however, looking to wean itself
destinations the sanctions regime went into tonnes of condensate, and its development off Russian gas entirely now that Moscow
effect on December 5 but any oil already at will be carried out in stages. is seen as an unreliable supplier, is wary of
sea on that day can still be accepted at its At the first stage, the volume of Russia sneaking gas to Europe via a Turkish
destination sanction free until January 19 to production will be 1.5 bcm per year. At its hub, should it be developed. Seeking to
allow for transit times. peak, the project can produce about 5 bcm promote the merits of having a gas hub in
Russia’s India-bound oil exports of gas per year. The field will also produce Turkey, the Russians have pushed the idea
skyrocketed to 902,000 bpd in October and about 10,000 barrels of condensate daily. that the prices of its Russian gas flows would
hit a record high of around more than 1mn be set at the hub rather than in Russia.
bpd in November, going from almost zero While Azerbaijan has pledged to pump
in January and February this year. Erdogan reportedly to revive more gas to Europe to help the continent
“This will likely result in Russia being address gas supply gaps left by Russian flows
India’s number one supplier in December,” idea of bringing Turkmen gas to curtailed since the outbreak of the Ukraine
Matt Smith, lead oil analyst at Kpler, told war, Turkmenistan’s vast resources remain
The Independent, replacing the previous Europe via Azerbaijan, Turkey largely untapped in terms of Western
leaders, the Kingdom of Saudi Arabia (KSA) customers. Turkmenistan pipes almost a
and Iraq. Turkish President Recep Tayyip Erdogan third of the gas it produces to China, with
Whether this high level of oil imports is reportedly looking to revive the idea the rest consumed domestically and a
from Russia is sustained after the January 19 of bringing Turkmen natural gas via his modest amount delivered to Russia.
deadline passes remains to be seen. country to Europe. Turkmenistan professes neutrality
Indian Oil Minister Hardeep Puri said Bloomberg on December 9 cited senior in foreign policy but its strong links to
earlier this week that his country was not Turkish officials as saying Erdogan wants Moscow have not been in any doubt since
concerned about the price cap imposed by to see the idea in play, but they noted that the nation won independence after the fall
the European Union on Russian oil. He said any solution would likely take years to of the Soviet Union.
Delhi's intends to "continue buying crude implement.
from Moscow at the present time." Erdogan is set to meet Turkmenistan’s

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