EDINBURGH, UK – Wood Mackenzie says the combination of the low oil price and Russia’s economic issues will make this a year of great uncertainty for the Caspian region.
State budgets will have to adjust to lower revenues, operators will look to optimize expenditure, and exploration activity is likely to remain subdued, the analyst claims.
Operators will probably favor low cost activity over higher-cost programs. BP and SOCAR are due to shoot 2D seismic on the shallow-water Absheron contract area in the Azeri sector. Both parties signed a production-sharing contract last December.
However, some planned major projects should continue, the analyst claims, including the start of construction of the Trans-Anatolian Pipeline (TANAP) and Trans Adriatic Pipeline (TAP) transporting gas from the Caspian Sea (the Shah Deniz field in the Azeri sector) to markets in Europe.
Phase One gas production capacity at Shah Deniz is expected to reach 1,040 MMcf/d following debottlenecking of the onshore reception plant at Sangachal.
Also in the Azeri offshore sector, the ramp up at the ACG’s West Chirag platform should alleviate Azerbaijan’s oil production decline, while replacement of the damaged pipeline serving the Kashagan field offshore Kazakhstan is expected to get under way during the second half of the year, allowing production to resume in 2017.