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SOCAR in Talks With Russia, Iran on Gas Purchase

SOCAR in Talks With Russia, Iran on Gas Purchase

Azerbaijan’s state energy giant SOCAR is in talks with the Russian Gazprom Company and Iran to purchase three billion cubic meters of gas annually.

This was stated by SOCAR President Rovnag Abdullayev after the ceremony of launching the platform No 7 at the Gunashli field in the Caspian Sea on March 14. This is the deepest and the first platform in the history of independent Azerbaijan fully designed and constructed by SOCAR.

He told journalists that there is still interest in purchasing Russian gas.

“We conveyed Gazprom our offer. We need gas for injecting into the reservoirs at the Azeri-Chirag-Gunashli block of fields to maintain stable oil production. Secondly, we plan to inject additional gas volumes into our underground gas storage facilities to fully use them. The capacity of gas storage facilities hits around five billion cubic meters. As a pilot project, we want to test the maximum capacity.”

He further added that SOCAR is negotiating with Iran about swap seasonal supplies.

“Iran has much unused gas during summer,” he said. “The talks are being held about pumping Iranian gas into Azerbaijani gas storage facilities and providing the northern provinces of Iran with gas in winter. At present, experts are discussing technical issues.”

China’s interest

Abdullayev went on to add that a number of Chinese companies, as well as the country’s Eximbank show interest in the project of Oil and Gas Processing and Petrochemical Complex in Azerbaijan.

He said that works on the construction of the OGPC are underway.

“Works on the project continue, and we are holding negotiations. Previously, we were in talks with potential investors, led by the Japanese Mitsui, and a working group was established. But we found their proposals ineffective and stopped working with them. We recommended the Japanese companies to revise their proposals. If they offer us more precise proposals, we will consider them. Otherwise, we will work with those companies that will bring the best offers,” he added.

The cost of construction of the OGPC is $17.1 billion (including interest on loans received during the construction period). Some 30 percent of the project’s cost is planned to be financed with the authorized capital (nearly $5 billion), while 70 percent of the projects – with the borrowed capital (about $12 billion).

The total cost of the first phase of the OGPC project is estimated at $7 billion (including interest on loans – $8.45 billion). The payback period of the project will last four to five years.

The OGPC will be established at a place 60 kilometers from Baku. It will consist of three processing enterprises and a thermal power plant (TPP). The project will be completed in late 2022 – early 2023.

The OGPC construction project implementation will improve the product quality, enhance the export potential of the country and help protect the environment of the capital.

The annual capacity of the refinery as part of OGPC will be 8.5-9 million metric tons; the gas processing plant will be 12 billion cubic meters, petrochemical production will exceed 1 million metric tons (the power of the plant for the production of polyethylene will be 800,000 metric tons, rigs for polypropylene production – 300,000 metric tons).