As oil and gas companies across the Caspian Sea region have seen profits fall dramatically due to the collapse of the price of oil, many are letting their profits fall further by investing funds in projects to increase their production levels. Azerbaijan, Russia and Turkmenistan are all looking to increase their gas production due to a variety of factors including foreign investment and extra export capacity.
Sofaz, Azerbaijan's sovereign wealth fund, is still seeing its income from Shah Deniz, the country's largest oil and gas field, fall this year. The nation's state owned oil and gas company, Socar, also reported a fall in production of 5.4% in the first five months of this year compared to 2015. Total commercial gas production was reported to be 19.72bn m3 in 2015 and, despite the fall in production during the first part of this year, Baku predict that it will exceed 20bn m3 in 2016. This will be the highest rate ever recorded in Azerbaijan. Despite the fall in profits and predicted increase in production, phase 2 of the development of Shah Deniz is pressing forward even though Sofaz report that the cost of this project has contributed significantly to the fall in its income. Falling costs of materials including steel and improvements in international cooperation have saved this project a great deal of money including the TransAnatolia gas pipeline (Tanap) costing $2bn less than anticipated.
Russia has also seen a serious drop in revenue from gas production and has sought to increase its export market by offering discounts. Azerbaijan's Socar were reportedly seeking to negotiate further discounts for the 3-5bn m3/y of gas it imports from Russia. However, Caspian Energy, part of the United Ship-building Corporation, report that Russian Lukoil has started further drilling in the Russian part of the Caspian sea on the Vladimer Filanovsky field. The extractable resources of this field are approximately 153.1mn mt oil and 32.2bn m3 of gas.
The Galkynysh gas field, in Turkmenistan, is the biggest offshore gas field in the world with the 26.2 trillion m³ of gas it potentially has in place. Development of this site began in 2013 but Turkmenistan are seeking international cooperation in expanding its gas production from exploration to transportation. A number of UK companies have offered various types of support. For example, ground works specialist, Tensar, have offered to design and transport equipment as well as install and assemble modular bridges; Perkins, experts in gas engines, have pledged gas generators, engines and spare parts.
As demonstrated by the companies looking to involve themselves in Turkmenistan's development of its gas fields, the UK is playing a major part in the growth of gas production in this region. As one of the few current UK suppliers to the natural gas industry, Ex~i Flow have the experience to assist in these types of operations. To find out how we can help your business call 01243 554920.