Azerbaijan Oil and Gas  Report Q4 2012

Date: September 19, 2012
Pages: 91
US$ 1,295.00
Report type: Strategic Report
Delivery: E-mail Delivery (PDF), Download

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Includes 3 FREE quarterly updates

BMI View: Progress on securing midstream infrastructure to carry Azeri volumes bodes well for our shortterm outlook, but the prospect of delays or disappointing volumes remains a key downside risk. Meanwhile, declining oil volumes may experience a temporary boost as new developments come online over the latter part of our 10-year forecast period to 2021, but peak Azeri oil production is approaching quickly. Nevertheless, the country’s prospects are boosted by more optimistic developments in the gas sector, where both new discoveries and scheduled developments will help raise export volumes to Europe. The key developments in Azerbaijan’s oil & gas sector are:
  • On the back of support from BP and the Energy Ministry of Azerbaijan, Nabucco West seems the most likely choice for the US$20bn Shad Deniz II project. The Shad Denis Consortium (SDC) must now decide between the Trans-Adriatic Pipeline (TAP) and Nabucco West as export routes for the next phase of the Shah Denis Field. The decision, delayed from 2012, is now set for mid-2013.
  • The Shad Deniz II project is expected to allow exports of 10bcm of gas to Europe and 6bcm to Turkey by 2018. The Shah Deniz Consortium (SDC) was expected to reach a decision on which export pipeline it favoured for the transportation of Azeri gas to southern Europe by the end of Q112; however, this deadline was missed and a new one has been set for mid-2013. SDC includes BP (25.5%), Norway’s Statoil (25.5%), Iran’s NIOC (10%), SOCAR (10%), France’s Total (10%), Russia’s Lukoil (10%) and Turkey’s TPAO (9%).
  • On June 26 2012, Turkey and Azerbaijan signed a US$7bn agreement for the Trans-Anatolian natural gas pipeline project, (TANAP), which will carry Azeri natural gas across Turkey to Europe. The pipeline is set to begin construction in 2014 and draw supply from Shah Deniz II with first gas planned in 2018.
  • Azerbaijan's 2011 oil production declined by an estimated 12.1% year-on-year (y-o-y) from 2010 to 914,800 b/d. For 2012, we forecast production will rise slightly (0.46%) to 919,030 b/d, with production forecast to remain below 1mn b/d until 2014.
  • Declining production was due in part to maintenance-related output drops at the BP-operated Azeri- Chirag-Guneshli (ACG) oil fields, where Azerbaijan draws most of its supply. BMI had already reduced its estimate for 2011 production at the field to around 937,000b/d (-10% y-o-y), including gas liquids.
  • The further development of the Azeri-Chirag-Gunashi (ACG) complex and liquids from the second phase of the Shah Deniz gas field could deliver a surprise to the upside in terms of volumes but, equally, project delays could undermine progress.
Azerbaijan’s dependence on energy prices leads to high volatility in the country’s export revenues. However, continued demand from emerging markets and persistent efforts from Europe to secure access to gas from the Caspian ensure there will be no shortage of demand for Azeri resources. Although oil market has moved away from the cycle of tight supply we saw in 2011 and Q112, we have now arrived at marked by volatile demand and ample supply. With supply now comfortably meeting demand, we believe OPEC basket oil prices will hold steady from an estimated US$107.52 per barrel (bbl) in 2011 to US$107.05/bbl in 2012, creating upside risk for the Azeri macroeconomic outlook.
BMI Industry View
SWOT Analysis
Azerbaijan Oil and Gas SWOT
Global Energy Market Outlook
Oil: Getting Closer To Emerging Markets Inflection Point
  Table: Oil Consumption Forecasts, 2010-2016 (’000b/d)
  Table: Oil Production Forecasts, 2010-2016 (’000b/d)
Regional Energy Market Outlook
Azerbaijan Energy Market Overview
  Table: Upstream Projects Database
Industry Forecast Scenario
Oil And Gas Reserves
  Table: Azerbaijan Oil & Gas – Historical Data And Forecasts, 2009-2016
  Table: Azerbaijan Oil & Gas – Long-Term Forecasts, 2014-2021
Oil Supply And Demand
Gas Supply And Demand
Refining and Oil Products Trade
Revenues/Import Costs
Key Risks To BMI’s Forecast Scenario
Oil And Gas Infrastructure
Oil Refineries
  Table: Refineries In Azerbaijan
Service Stations
Oil Storage Facilities
Oil Terminals/Ports
Oil Pipelines
Gas Pipelines
  Table: Rival Gas Pipeline Projects
Regional and Country Risk/Reward Ratings
  Table: Central And Eastern Europe Risk/Reward Rating
  Table: Upstream Risk/Reward Ratings
  Table: Downstream Risk/Reward Ratings
Azerbaijan Upstream Rating – Overview
Azerbaijan Upstream Rating – Rewards
Azerbaijan Upstream Rating – Risks
Competitive Landscape
Executive Summary
  Table: Key Domestic And Foreign Companies
Overview/State Role
Licensing And Regulation
Government Policy
Licensing Rounds
International Energy Relations
  Table: Key Upstream Players
  Table: Key Downstream Players
Company Monitor
BP Azerbaijan
Lukoil Azerbaijan
ExxonMobil – Summary
Eni – Summary
Inpex – Summary
Chevron – Summary
Itochu/Delta Hess – Summary
TPAO – Summary
Total – Summary
ONGC Videsh Ltd (OVL) – Summary
Korea National Oil Corporation (KNOC) – Summary
GdF Suez – Summary
RWE Dea – Summary
Others – Summary
Central And Eastern Europe – Regional Appendix
  Table: Oil Consumption – Historical Data & Forecasts, 2009-2016 (’000b/d)
  Table: Oil Consumption – Long-Term Forecasts, 2014-2021 (’000b/d)
  Table: Oil Production – Historical Data & Forecasts, 2009-2016 (’000b/d)
  Table: Oil Production – Long-Term Forecasts, 2014-2021 (’000b/d)
  Table: Refining Capacity – Historical Data & Forecasts, 2009-2016 (’000b/d)
  Table: Refining Capacity – Long-Term Forecasts, 2014-2021 (’000b/d)
  Table: Gas Consumption – Historical Data & Forecasts, 2009-2016 (bcm)
  Table: Gas Consumption – Long-Term Forecasts, 2014-2021 (bcm)
  Table: Gas Production – Historical Data & Forecasts, 2009-2016 (bcm)
  Table: Gas Production – Long-Term Forecasts, 2014-2021 (bcm)
  Table: LNG Exports – Historical Data & Forecasts, 2009-2016 (bcm)
  Table: Net LNG Exports – Long-Term Forecasts, 2014-2021 (bcm)
Methodology And Risks To Forecasts
Glossary Of Terms
  Table: Glossary of Terms
Oil And Gas Risk/Reward Ratings Methodology
Ratings Overview
  Table: BMI’s Oil & Gas Business Environment Ratings – Structure
  Table: BMI’s Oil & Gas Upstream Ratings – Methodology
  Table: BMI’s Oil & Gas Business Environment Downstream Ratings – Methodology
BMI Methodology
How We Generate Our Industry Forecasts
Energy Industry
Cross checks
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