Azerbaijan, Russia’s Lukoil mull projects in alternative energy

The Russian oil company Lukoil is interested not only in oil and gas fields in Azerbaijan; projects in the field of alternative energy are also being discussed, Azerbaijani Energy Minister Parviz Shahbazov told journalists on the sidelines of the Russian Energy Week, Report informs.

“Lukoil is our long-term partner, we are working closely. This [Shah Deniz] isn’t our first project. Lukoil is also showing interest not only in oil and gas fields but also in alternative energy. We are consulting, we are working,” he said.

Lukoil has recently announced the conclusion of an agreement on acquiring 15.5 percent interest in the Shah Deniz gas project in the Azerbaijani sector of the Caspian Sea from Petronas for $2.25 billion. Following completion of the sale, Lukoil’s interest in the project will increase from 10 percent to 25.5 percent.

Lukoil is also conducting negotiations to join the exploration and development of the Dostlug oil field in the Caspian Sea and wants to become an operator of the oil field. Oil reserves in the field are estimated at 65-130 million tons.

The Dostlug field, located on the Turkmen-Azerbaijani border, has been the subject of controversy since the collapse of the Soviet Union. The Convention on the Legal Status of the Caspian Sea, signed in 2018 by Turkmenistan, Kazakhstan, Russia, Azerbaijan, and Iran, initiated efforts to define rights to oil and gas extraction. However, the project was the subject of disagreements between Azerbaijan and Turkmenistan, which disputed its belonging to each other. At the beginning of this year, the countries agreed to jointly develop the field.

The Shah Deniz gas condensate field is located in the Azerbaijani sector of the Caspian Sea, 70 km southeast of Baku. The project is being implemented under a production sharing agreement (PSA). The commercial production under the project began in 2006.

The project participants are bp (operator, share 28.8 percent), Lukoil (25.5 percent), TPAO (19 percent), SOCAR (10 percent), NICO (10 percent), and SGC (6.7 percent).