A new major investment phase is beginning in Azerbaijan’s energy sector. The adoption of the final investment decision on the full-scale development of the Absheron gas-condensate field could turn the project into one of the main sources of Azerbaijan’s gas production and export capacity in the coming years. Capital investment of approximately $4.2 billion is involved, and the main question is how much economic value this investment will create for Azerbaijan.
The recoverable gas reserves of Absheron are estimated at approximately 140 billion cubic meters. The first phase of the field came on stream in 2023 and has the capacity to produce 1.5 billion cubic meters of gas per year and 12,000 barrels of condensate per day. The new Full Field Development phase will increase the field’s total gas production to 6 billion cubic meters per year and condensate production to 47,000 barrels per day.
The new phase is expected to come on stream in 2029. The key figure here is the additional 4.5 billion cubic meters of gas. This is a significant volume for Azerbaijan’s gas market.
In a simple calculation, if the average selling price of 1,000 cubic meters of gas is $200, the annual gross sales value of 4.5 billion cubic meters of gas could amount to approximately $900 million. If the price is $250, this figure would rise to $1.125 billion, and at $300, it would reach $1.35 billion. However, Absheron’s economic potential is not limited to gas.
The second phase of the project is planned to produce approximately 35,000 barrels of condensate per day. This amounts to approximately 12.8 million barrels per year. If the average price of condensate is assumed to be $60, its annual gross sales value could reach approximately $767 million.
Thus, purely for illustrative purposes, in a scenario where the average gas price is $200 and the condensate price is $60, the annual gross product value of the new phase could be approximately $1.67 billion. Here, however, an important warning is necessary: $1.67 billion is the theoretical sales value of the product. Production and operating costs, transportation, maintenance, taxes and other payments must be deducted from this amount.
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