The French energy major Total this weekend announced yet another major natural gas discovery in the Caspian Sea offshore from Azerbaijan. The Absheron block is located to the east of the better-known Shah Deniz field (in which Total has a 10% share), about 100 kilometers east of Baku.

Total has been interested in Absheron since 1997, when it became a 20% partner in a Production Sharing Agreement (PSA) with Chevron (30%) and the State Oil Company of the Azerbaijani Republic (SOCAR, 50%). An exploration well was drilled in 2001 but failed to disclose quantities sufficient to justify continuing, given the level of energy prices at the time. Since the agreement lapsed in 2003, those prices have risen to the point where new exploration indicates that the field has become commercially viable.

In February 2009, Total and SOCAR signed a new 60-40 agreement for exploration, development, and production, with Total to act as operator during the exploration phase. With SOCAR’s approval, Total brought in Gaz de France as a 20% partner, reducing its own stake to equal SOCAR’s 40%.

In 2001, Absheron was estimated to contain only 1-3 million cubic meters of gas plus 700 million barrels of condensate. SOCAR later estimated it to contain 300 billion cubic meters (bcm) of natural gas and an undetermined amount of condensate. Most recent estimates are 350 bcm of gas and 340 million barrels of condensate. Production could begin as soon as the middle of the current decade.

How the gas will be evacuated and where it will go are yet to be decided. The volume of the South Caucasus Pipeline (SCP, also called BTE for Baku-Tbilisi-Erzurum) for natural gas will be expanded for Shah Deniz Two gas to be transited to Turkey and Europe, assuming that Azerbaijani-Turkish negotiations over terms succeed following the instructions given this summer to their respective delegations by Azerbaijan’s president Ilham Aliev and Turkey’s prime minister Recep Tayyip Erdogan at the conclusion of a working on bilateral relations.

Probably even an expanded SCP feeding into the Nabucco system would be insufficient for the Absheron, Umid, and other fields scheduled to come on line in the course of the decade. Because the Azerbaijani-Turkish negotiations are not yet wrapped up, a decision seems not to have been taken about whether the volume of the SCP will be ramped up or whether another pipeline will be laid in parallel.

The recent strikes in Azerbaijan’s offshore and others to be expected, together with the likelihood that gas from Turkmenistan will finally cross the Caspian Sea for insertion into European Commission’s Southern Gas Corridor (SGC), makes the White Stream project (under the Black Sea from Georgia to Romania) more and more feasible from a pragmatic supply standpoint.

White Stream is part of the SGC, along with the Trans-Adriatic Pipeline (TAP, 10-20 bcm/y, Greece to Italy, still on the drawing-board) and the Interconnector Turkey-Greece-Italy (ITGI, 10 bcm/y, ITG section in service since 2007, IGI section still on the drawing-board; construction of a Greece-Bulgaria interconnector has meanwhile begun). White Stream’s capacity is projected at 32 bcm/y although it is not excluded to begin with as few as 8 bcm/y and subsequently lay additional strings. Following this method, even 32 bcm/y would not be an upper bound, should still larger quantities become available later from Turkmenistan and/or Iraq.

This summer SOCAR estimated that by the first half of the next decade, Azerbaijan would have a total 25-30 bcm/y available for export from all sources. Those sources include, besides Shah Deniz and Absheron, yet other offshore fields that are currently being explored or yet to be explored, particularly the Babek, Nakhechivan, Umid, and Zafar-Mashal blocks.

In November last year, for example, SOCAR announced preliminary results of its exploration of the Umid block. Reserves are estimated at 200 bcm with approximately 225 million barrels of condensate. The Umid block was originally part of the Babek-Umid block. Babek is now also a separate block that Azerbaijan intends to explore on its own.

In July, SOCAR announced that it expected to confirm a total of 600 bcm of natural gas in the Nakhechivan and Zafar-Mashal blocks (and still further volumes of condensates), half of which from Nakhechivan, concerning which it has signed a memorandum of understanding with the German firm RWE. In addition yet another block, Shafag-Asiman, is to be developed jointly with BP and is low-end estimated to contain 300 bcm of natural gas. As the example of Absheron shows, these figures may well increase as exploratory drilling continues.

Azerbaijan has acquired not only political independence but also increasing self-directedness in the exploration, production, and export of its energy resources. Its decision to cooperate with Total rather than BP in developing the Absheron block and its ability to carry out the Umid exploration entirely on its own are examples of this. It is no longer possible to fail to take the country seriously as an autonomous player in the Caspian Sea and Black Sea energy provinces and, given the magnitude of its reserves, not to mention its potential as a transit country, literally for decades to come.

[A redacted version of this text was published in Asia Times Online.]