Today, We Have the Reward of Our Initial Optimism, But Also the Result of Our Tenacity

Today, We Have the Reward of Our Initial Optimism, But Also the Result of Our Tenacity

An Interview Mr Christian Giudecilli, General Manager TOTAL E&P Azerbaijan.

By Rovshan Pashazadeh

1) Total can already be regarded as one of the “oldest” companies working in Azerbaijan. Your company has been working on the Azerbaijani oil and gas market for a long time, and we have to say openly that the company’s activities have become more intensive over the past five years. Could you please tell us frankly if you expected to be so successful when you came to Azerbaijan for the first time 16 years ago?

Total has indeed been working in Azerbaijan for a long time: it started initially with the former ELF company joining the Shah Deniz consortium and signing a PSA in 1996. Thanks to efforts from all partners and the good performance of the operator, BP, this turned into a success story. Total’s equity production from the field in which we hold a 10% share reached 13,000 barrels equivalent of oil per day in 2010. Linked to our presence in Shah Deniz consortium, Total also holds a 10% interest in the SCP (South Caucasus Pipeline) gas pipeline that transports the gas produced in Shah Deniz to the Turkish and Georgian markets. Total also holds a 5% interest in the BTC (Baku-Tbilisi-Ceyhan) oil pipeline, which connects Baku and the Mediterranean Sea.

Activities continued in 1997 with exploration in the shallow waters of the Lenkoran-Talysh Deniz block, with all the companies at the origin of the present Group, ELF, Fina and Total. It was exploration and bear its part of risk: the block was relinquished after the drilling of one well.

The next adventure was Absheron, Total gave it a first go, as partner, but it did not prove to be successful. However, Total has been bold enough to come back and negotiate a new PSA. Total EP Absheron became the operator of the license with 40% equity. The partners are SOCAR (40%) and GDF SUEZ (20%).

We grounded our approach on the conclusions of our exploration geologists who had reviewed the data and their studies. They found fresh ideas to rejuvenate the technical approach on the block.

What did we expect 16 years ago? You know, Oil business, specially exploration, is a world of optimism and boldness. You have to believe in the ideas and analysis of your geologists. They give you a percentage of success, sometimes it is low. But we take the decision to go based on these few percent of success. Which means, to answer your question, that, yes, we came initially in Azerbaijan for success. Today, we have the reward of our initial optimism, but also the result of our tenacity.
2) How much has Total invested in projects in Azerbaijan over the past year? What sort of plans does the company have concerning capital investments in the next few years?

Total invested a significant amount in Azerbaijani waters : Lenkoran block was a 56 M$ project for us and the first Absheron PSA was an investment of around 86 M$ for Total. Shah Deniz related projects are multibillion dollars projects : phase 1 is a nearly 5 billion dollars project for field’s reserves estimated at 1.2 trillion cubic meters, SCP costed more than 1 billion and BTC reached also the 4 billion dollars level. Shah Deniz Phase 2 this year will address contracts of more than 3 billion dollars . The target is an additional 16 billion cubic meters per year production. Of course, we have invested and continue to invest our share in these projects. For Absheron, the exploration investment will be several hundred million dollars. One must expect a multibillion dollars project when we talk about a future development.

This means a significant investment in Azerbaijan.
3) In general, what is the correlation between Total’s projects in Azerbaijan and its projects in the Caspian basin? How can this correlation change in the future?

Total in the Caspian is actively engaged since 1993 and apart from Azerbaijan the Group plays an active role in the North Caspian Operating Company (NCOC), operator of the Kashagan oil field. Total is also looking at an offshore project in the Russian waters of the Caspian with Lukoil operator: the Khvalynskoye oil gas condensate field. But, there is no competition internally between these projects and Total has no intention to slow down on any of them : they are all evaluated at their own battery limits.

To be complete, let me also mention that we are also evaluating the export of our Kazakh oil through the BTC : this may be a pan-Caspian approach!

4) About 120-140 years ago, there was the following saying among Absheron oil workers: If the well you drill turns out empty, do not go to that field again. But with its activities in Azerbaijan, Total proved the opposite: It resumed the unsuccessful exploration work it had carried out in Azerbaijan in the past and discovered a gas field in September 2011. Where did this belief come from?

I cannot tell…. since 140 years, our technology has very much improved specially in the formation evaluation and seismic techniques. But with more complex data, there are also more possibilities of interpretation and by consequence, more consistent geological models…

The success of Absheron evidenced this : a new processing of the existing seismic data, coupled to a new geological model based on new hydrodynamics assumptions gave birth to a new vision that both explained the failure of the first well and ….brought hope on another part of the structure….the dream started ! It was then necessary even within Total to convince the believers of this ancient saying to change their minds! But this is precisely what a company like Total brings to Azerbaijan. Total has operated in many different regions and geological contexts. They may be similar to the Caspian waters or be completely different, but Total has built with all these operations an extensive know how, useable anywhere.

Hence, when Total brings its ideas and its specialists here, it means that all the expertise of the Group is made available for the operations of Absheron. With such support, relying on things already done and seen locally does not make sense any more. That is why everyone should be proud of Total having proved this saying could be wrong.

5) In the fourth quarter of 2011, Total started drilling a side well in Absheron. Is there any news about its results?

The operations on the well of Absheron actually started at the very end of 2010 when the Heydar Aliyev semi-submersible rig arrived close to the location of the well. The well is located in 500 metres of water, 100 kilometres South East of Baku, some 25 kilometres north east of the Shah Deniz field.

After 7 months of drilling operations, the well encountered the first target. Drilling the whole reservoir section and evaluate the formation lasted 4 months as we had to make fully sure that the major element of safety, the Blow Out Preventer (BOP), was properly functioning. It was found during a routine test that one element had broken and it was not 100% operational. In the challenging conditions of the deep Caspian Sea reservoirs, it was absolutely necessary to have all of our safety equipment up and running. But let us come back to the results, the well has encountered more than 500 feet of cumulated net gas pays within high quality sands on the northern flank of the structure. Reservoirs are expected to extend over the entire northern part of the structure, which could mean a potential of several trillions of cubic feet of gas and with its associated condensates. The well was finally drilled to a depth of 6874 metres. Two tests were planned on different reservoirs. The first one has just ended and results are promising. Operations will continue with the drilling of a sidetrack aiming at the northern part of the structure in order to evaluate the extent of the reservoir.

If positive, this will trigger a more complete appraisal program, together with more studies, all actions leading logically to the preparation and submission of a development program.

6) The Absheron deposit is located in the deep waters of the Caspian Sea and the productive layers there are situated very deep (below 7,000 metres). As far as we know, in order to carry out drilling work in such difficult conditions, the State Oil Company suggested building a new floating rig. This rig must be a very unique technical installation that has no analogues in the Caspian. Can you give our readers detailed information about it?

You are fully right. There are only 4 drilling units at the moment in the Caspian waters capable of tackling the problems of these deep and high-pressure reservoirs: one in Iran and three in Azerbaijan. The competition is harsh to get access to these rigs and the need for new built units is now blatant, with all the perspectives of development and the remaining exploration efforts required for a full evaluation of the potential of deep Azerbaijani waters. What we are talking about now are units capable of drilling in more than 500 m water depth, sustaining well pressure in the range of 15 000 psi and equipped with a hoisting capacity of 900 metric tons approximately. With such design, this type of rig could cost between 500 and 1000 million dollars. It is a significant investment. We, Total, follow this issue very closely as we need to drill in the future several wells on the structure of Absheron.

Before we finish this interview, I would like to add that Total is on its way of entering a new era in Azerbaijan: we are facing a challenging project which will require us to perform the most adapted appraisal work for a difficult development. At a time, we will also move from our current position as an operator in a consortium into the role of a major partner of SOCAR, teaming up in a new operating company to be created. All this is of course an exciting adventure in front of us, an adventure which we will share with Azerbaijanis and which will provide Total a sustained activity in Azerbaijan for many years. I am very glad to be part of that.

Azerbaijan Today Magazine 2012