Horizon’s contacts indicate that the international consortium developing the Shah Deniz (SD) field is eager for Petronas to join after Statoil’s departure. SOCAR and its Western partners are accustomed to working with Iranian and Russian minority shareholders and are keen to partner with a cash-rich industry leader. Additionally, Petronas already has producing assets in Block 1, located roughly 100km from the SD field in the Turkmen offshore. The block contains proven reserves of at least 1 tcm of gas, 200mn tons of oil and 300mn tons of gas condensate. Since 2011, Petronas has been gradually increasing its sales of crude and condensate through the Baku-Tbilisi-Ceyhan pipeline via Azerbaijan while selling volumes of associated petroleum gas to Turkmenistan.
The SD consortium’s long-term hope is to sell Petronas’ gas either directly to the SGC or through a swap arrangement, as Petronas is set to produce about 5 bcma of gas by 2020. IOCs are also hopeful that, given falling global oil prices and complexities in Azerbaijan’s offshore greenfields, Baku will soon move to invite them to develop the remaining untapped proven reserves. Horizon contacts indicate that more serious talks about this will take place in the next six months.