"Annual investment in Azerbaijan's energy sector peaked in 2014-15, when expenditure was at its greatest for Shah Deniz Phase Two and the Southern Gas Corridor. We do not expect future annual investment to match these highs, as upstream projects will be smaller in scale than the $20 billion Shah Deniz Phase Two," she said.
"In our base case, we expect more than $20 billion to be invested (in total) in Azerbaijan's upstream sector between 2018 and 2025. This includes the new oil platform at ACG (Azeri Central East), for which a Final Investment Decision is targeted in 2019."
However, Sherman believes that several other multi-billion-dollar projects could be confirmed, largely focused on gas: via deals with new partners at Umid-Babek and Karabakh; and full development of Absheron and ACG non-associated (deep) gas.
"In addition, SOCAR GPC would require an additional $4 billion. Renewed exploration in shallow or deep waters could also reveal new oil or gas discoveries," she noted.
However, like any country, Azerbaijan must compete for investment against other attractive oil and gas opportunities in the region and across the globe, Sherman said, adding that cost savings and the profitability of gas exports will be crucial factors.
Wood Mackenzie is an international consulting company providing a wide range of services in the fuel and energy industry. The company was founded in 1973 and its headquarters is located in Edinburgh, Scotland.
In Azerbaijan, Wood Mackenzie works both with representations of its global clients and with local companies.
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