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Azerbaijan’s gas revenues to increase significantly

Azerbaijan’s gas revenues to increase significantly

Economy
10 July 2020, 16:24 266
So far, the revenues from this area cannot be compared with the country's oil revenues
 
Azerbaijan produced 17.8 million tons of oil (including condensate) in January-June 2020, down 1 million tons from the previous year.
Of this, 12.2 million tons belonged to Azeri-Chirag-Guneshli, 1.9 million tons (condensate) to Shah Deniz. SOCAR produced 3.7 million tons of oil.
In the first half of the year, 14.7 million tons of oil (including condensate) was exported, the Energy Ministry told Trend. This is about 900,000 tons, or 5.9 percent less than in January-June 2019.
During this period, gas exports amounted to 6.5 billion cubic meters, which is 16.9 percent more than the same period last year. In January-June, Azerbaijan exported 5.2 billion cubic meters of gas to Turkey, up 24.5% from the previous year. The volume of gas exported to Georgia was 1.3 billion cubic meters. During the reporting period, TANAP transported 1.9 billion cubic meters of gas to Turkey.
From June 30, 2018, to July 1, 2020, total gas transportation via TANAP made up 5.8 billion cubic meters.
According to the Energy Ministry, from the launch date to July 1, 2020, the Azeri-Chirag-Guneshli (ACG) produced 171.2 billion cubic meters of gas. The Shah Deniz field produced 126.3 billion cubic meters of gas in the same period. The total export of Shah Deniz gas from the date of launch till July 1 made up 83.5 billion cubic meters. 
Can revenues from gas exports compensate for our losses against the background of falling oil prices? In general, when will our gas revenues increase significantly?
According to Head of the Oil Research Center Ilham Shaban, at present, gas revenues cannot be compared to our oil revenues. "But in the future, revenues from gas exports may increase many times over. A total of 6.5 billion cubic meters of gas was exported in six months. Of this, 1.3 billion cubic meters are sold on the regional market, and 5.2 billion cubic meters of gas is sold on the Turkish market, at a higher price. In general, we can export 12.5 billion cubic meters of gas this year. If we convert these figures into oil equivalent, it is 12.5-13 million tons of oil. Another issue is that gas is 40 percent cheaper than oil. Our gas exports are up to 50 percent less than oil exports. A barrel of oil now sells for $ 42-43. If we take the equivalent, the revenue from oil production of 30 million tons can be gained from 50-60 billion cubic meters of gas. But the total gas export potential of Azerbaijan is 35 billion cubic meters. That is, against the background of existing export opportunities, it is simply impossible for gas revenues to reach oil revenues. However, if we manage to open the Shafag-Asiman gas field, our infrastructure will expand, which will create new opportunities for us. In this case, our gas revenues may be much higher than expected. That is, everything depends on our potential and market prices,” he said. 
According to economist, MP Azer Badamov, declining oil revenues from oil exports can compensate for part of our oil revenues. "Gas and oil are the most profitable natural resources of Azerbaijan. These resources are a great source of income for our country. These revenues are the guarantor of our future. Until now, we have been producing mainly oil, and oil revenues have been a major part of our total revenues. Recent work on the production and export of natural gas will increase the country's gas revenues. The commissioning of the Southern Gas Corridor and the completion of the TAP project, as well as the commissioning of Shah Deniz-2, will increase our gas revenues. The price of natural gas is stable, unlike oil prices. If we take into account that today Azerbaijan has international export pipelines, we can say that in the future our country's gas revenues will increase significantly. Our belts are not working at full capacity yet. The delivery of Azerbaijani gas to Europe and the commissioning of new fields will allow for more efficient use of Azerbaijan's natural gas resources, which plays an important role in compensating for some of our declining oil revenues,” he said.
 
Shabnam