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Argus Azerbaijan International Petroleum Summit 2017

 

The Argus International Petroleum Summit 2017 took place in Baku, Azerbaijan, on 12-13 October. The general partner was the State Oil Company of Azerbaijan Republic (SOCAR).

The summit aroused keen interest from major players on the Caspian market, including international oil production, transportation, trading, refining and petrochemical companies, as well as representatives of government ministries and departments. More than 400 participants from 28 countries — including Azerbaijan, Russia, Georgia, Turkmenistan, Uzbekistan, Iran, Switzerland, the UAE, Kazakhstan, the UK, Romania, Ukraine and Turkey — gathered to discuss and analyse industry trends and prospects. Companies represented included ABN Amro bank, Aria Petroleum, Azerbaijan Caspian Shipping, AzerTrans, BP Azerbaijan, Gazpromneft, Georgian Railways, Glencore, Integral Petroleum, Litasco, Uzbekneftegaz, Petkim Petrokimya Holding, RN-Bunker, Turkmen Petroleum Products Trade, Vitol and Nostrum Oil & Gas.

Opening the summit, Argus’ Russia and FSU head Vyacheslav Mishchenko greeted delegates and expressed special thanks to SOCAR, for its support organising the conference. “Azerbaijan is the key provider of energy security for Europe. Holding such a forum in Baku is an excellent opportunity to learn about the progress of projects related to the extraction and transportation of hydrocarbons, as well as the development of this regional market,” Mishchenko said.

SOCAR president Rovnag Abdullayev wished delegates a successful conference and shared the company's plans to pursue global energy projects. “The renegotiation of the agreement for development … of the Azeri-Chirag-Gunashli (ACG) fields in the Azeri sector of the Caspian Sea on more favourable terms for Azerbaijan that took place last month proves the strength of the country’'s economy,” Abdullayev said. He also spoke about the “southern corridor” gas transportation project, noting that work is proceeding according to schedule. SOCAR plans to start supplying Azeri gas to Turkey through the Trans-Anatolian Pipeline (TANAP) from late 2018 and to Europe through the Trans-Adriatic Pipeline (TAP) from early 2020.

Gary Jones, BP president for Azerbaijan, Georgia, Turkey, said Azerbaijan is securing the status of a regional petroleum hub: “The country has three key advantages: rich hydrocarbon resources; developed infrastructure; and a favourable geographic location.”

Azerbaijan Railways chairman Javid Gurbanov highlighted development of the region’s transport infrastructure in his welcoming speech. “The launch of the Baku-Tbilisi-Kars railway in November this year will lead to a reduction in tariffs and a faster delivery of goods to consumers. Most of the work has already been completed. The route is almost ready for operation,” Gurbanov said.

Argus head of operations Philip Shaw noted the importance of holding such a large-scale event in Azerbaijan ― which as the first country to create infrastructure for industrial oil production, set an example for others. “It was here in the second half of the 19th century that the world’s first oil tanker appeared, and in the 20th century the first volumes of offshore oil were extracted and technologies for the offshore extraction of hydrocarbons were improved,” Shaw said.

The first session of the summit was dedicated to the key issues for the crude and oil products market in the Caspian region. SOCAR General Manager for marketing and operations Adnan Ahmadzada shared some insight on the development of SOCAR’s marketing and trading activities. He revealed that the company supplied 40mn t of crude to the global market last year, of which 22mn t was produced in Azerbaijan and 18mn t sourced from other producers. The crude was delivered using three main routes: the Baku-Tbilisi-Ceyhan (BTC) pipeline, Baku-Supsa pipeline and Baku-Novorossiysk pipeline.

Litasco petrochemicals trading director Aleksey Dzyuba and Argus senior editor Rauf Guseynov shared information on the development and prospective destinations for crude and product exports from the Caspian region.

At the session on transportation and logistics infrastructure, market participants discussed the possible increase in crude and oil product supplies from the region, primarily as a result of expected production growth in Kazakhstan next year. Georgian Railways deputy general director Alexi Nikolaishvili, Azerbaijan Railways deputy chairman Igbal Khuseynov, and AzerTrans deputy general director  Kamran Agayev shared their views on the situation.

SOCAR vice-president for strategic development Tofig Gahramanov, supervisory board chairman of SOCAR’s Azerikimya production union Mukhtar Babayev, and SOCAR chief executive for polymers Farid Jafarov discussed the prospects of oil refining and the progress in retrofitting and upgrades at the leading oil refineries. Particular attention was drawn to plans for significant upgrades that will allow the Heydar Aliyev refinery start producing gasoline and diesel meeting Euro 5 engine emissions standards and to triple production of polypropylene and polyethylene from the current 50,000 t/yr.

Delegates were especially interested in a report from SOCAR Trading senior project manager Togrul Kocharli on the implementation of the ElectroGasMalta project, which provides Malta with clean electricity. “The project includes a power plant, a regasification facility and a floating gas storage facility, which makes it unique for Europe. It is cheaper here to operate advanced LNG power plants than stations powered by other fuels,” Kocharli said.

Development of logistics routes and the infrastructure for liquid cargo transportation was addressed in reports from the first deputy chairman of Azerbaijan Caspian Shipping, Mubariz Jabbarov, and the Port of Baku’s chief operating officer, Eugene Seah.

The first day of the summit ended with a cocktail reception, which offered an opportunity for delegates to continue their discussions in an informal atmosphere.

The second day featured discussions between delegates from the oil refining and chemicals sectors of Caspian countries and neighbouring states. The director of SOCAR’s Carbamide plant, Khayal Jafarov, gave an update on progress at the urea plant: “Construction will be completed by the end of this year, and next year the plant will be put into operation. The facility will produce 650,000-660,000 t/yr of urea, of which 150,000-200,000 t/yr will be sold domestically and the rest exported.”

The general director of Petkim Petrokimiya Holding, Anar Mammadov, presented an overview of the Turkish petrochemicals market, while Ukrgazvydobuvannya commercial director Sergey Fedorenko reported on key developments in Ukraine’s petrochemicals industry.

In addition, delegates discussed the supply of jet fuel to various destinations and the current situation in the mini-refinery market.

The official summit programme ended with a session on the development of gas transportation projects, with speakers reporting on the progress of the southern corridor, and development of the Shakh Deniz gas and condensate field. “In the process of implementation, we managed to reduce the cost of the project by about 20pc to $41.5bn. In the initial stage, the southern corridor is expected to be used to supply gas that will be produced from the second development phase of the Shakh Deniz project,” general director Southern Gas Corridor project Afgan Isayev said.

The summit closed with an evening reception at a popular Baku restaurant.

Market participants responded with positive feedback, saying the summit should become a regular event, to promote co-operation and help establish business ties among the region’s industry professionals.

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