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SOCAR not concerned about future gas sales

December 17/2019

MOSCOW (MRC) -- Azerbaijan's state-owned SOCAR expects to see its gas sales continue unimpeded by the energy transition, reported S&P Global with reference to the oil company's president Rovnag Abdullayev.

Despite a growing backlash across Europe toward fossil fuel use, Abdullayev also told S&P Global Platts in an interview with this week that gas still had a crucial role to play in the European energy mix.

SOCAR was looking at carbon capture and storage (CCS) and carbon capture, utilization and storage (CCUS) projects as a way of reducing emissions, he said.

"As a company, we have not observed this backlash against gas yet," Abdullayev said. "We rather feel that there is a more general resentment towards the excessive use of fossil fuels."

Abdullayev said that while there were some general considerations, from a corporate perspective "we are not so concerned about the future sales of gas from Azerbaijan".

Gas from the second phase of the Shah Deniz offshore field is piped to Turkey and will be able to flow onward to Bulgaria, Greece and Italy once the TAP pipeline and the Interconnector Greece-Bulgaria (IGB) line are completed.

First gas to Italy was expected in October next year, with Shah Deniz 2 set to have annual production of some 16 Bcm/year.

"We have almost completed the Southern Gas Corridor, strictly abiding to the highest security and environmental standards," Abdullayev said.

According to European Commission-backed research, Azerbaijan has been classified as a "low-emission source" in the chain from the gas fields to the consumption market among European gas suppliers, he said.

"We have signed contracts for the sale of gas for the next 25 years with a wide array of major European companies. Our buyers do not anticipate any difficulties in the buying of our products as there is a widening gap between local production in Europe and demand, according to forecasts."

Abdullayev said SOCAR was also benefiting economically from its environmental policies, including limiting flaring of associated gas from its oil operations.

"The results of collecting associated gas from our platforms - instead of flaring them - are quite remarkable. It has a significant benefit both in terms of the protection of the environment and as an additional source of income for SOCAR," he said.

Associated gas collected from SOCAR-operated platforms amounts to about 15% of its total annual gas production, while from 2020 the company aims to halt flaring altogether., Abdullayev said.

"From next year, we will have zero flaring of associated gas at SOCAR. This gives us an advantage compared to other companies in the industry that are aiming to achieve these results by 2030."

"This is a case where an environmental program can be regarded both as an investment in sustainable production and business," he said.

Sustainability, he said, was becoming "increasingly important for us as a company".

"We are reviewing project ideas for the accumulation of carbon emissions, to be used as raw materials and to inject it into the underground layers in various segments of our manufacturing chain," Abdullayev said.

"Our methanol plant has already been equipped with an online monitoring system for the reuse of CO2 emissions during the combustion phase of production."

The company has also declared a "long-term goal" for its own operations to be zero emissions, including using more environmentally-friendly corporate transport, such as hybrid vehicles and compressed natural gas (CNG)-fueled vehicles.

Abdullayev said public discourse "sometimes does not differentiate between different types of energy sources and the role of oil and gas beyond its use as fuel is often overlooked".

"For several years, we have been increasing our investments in the petrochemical industry. We provide direct feedstock for a wide array of commodity goods, such as plastics, rubber, fertilizers, and medicine. The feedstock for the petrochemical industry comes from the production of crude oil."

"We need to properly differentiate between the restriction on fossil fuels that have a higher or lower polluting impact for the environment. There is an environmental risk to increasing the ratio of more polluting and sometimes cheaper fuels in the energy basket, like heavy oil and coal, as opposed to natural gas, which is an environment-friendly alternative," he said.

Abdullayev said Socar had also assumed an additional role as a "proactive contributor to and a driving force within the international environmental movement".

For instance, Socar recently organized an international conference on the role of the Paris Agreement in combating climate change and protecting the environment.

As MRC informed before, SOCAR Turkey Energy, which is a subsidiary of the State Oil Company of Azerbaijan (SOCAR), plans to lay the foundation of the Mercury petrochemical complex in Turkey in H1-2020. The plant will be located in Aliaga district, next to the Petkim petrochemical complex and the STAR refinery. With the commissioning of this plant, Turkey will settle the matter with the import of purified terephthalic acid (PTA).

PTA is one of the main feedstocks for the production of polyethylene terephthalate (PET).

According to MRC's ScanPlast report, Russia's overall estimated PET consumption reached 42,020 tonnes in October 2019, down by 32% year on year. At the same time, the estimated PET consumption in Russia increased to 593,480 tonnes in January-October 2019, up by 5% year on year.

SOCAR, which is keen on expanding operations in the retail oil products market abroad, is involved in exploring oil and gas fields, producing, processing, and transporting oil, gas, and gas condensate, marketing petroleum and petrochemical products in the domestic and international markets, and supplying natural gas to industry and the public in Azerbaijan.
Author:Margaret Volkova
Tags:crude and gaz condensate, PET-granulate, terephthalic acid, gas processing, petrochemistry, packaging, Petkim, SOCAR Polymer, Azerbaijan, Turkey.
Category:General News
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