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Azerbaijan Overview

Azerbaijan

in figures

Oil Reserves7 billion barrels

Oil Production795,000 bopd

Gas Reserves1.3 tcm

Gas Production17.7 bcm

Azerbaijan: The Historical Energy Powerhouse

Azerbaijan is one of the world’s oldest oil-producing countries and is a crucial oil and gas supplier in the Caspian Sea region. Its largest hydrocarbons basins are located offshore in the Caspian Sea. State-run SOCAR is responsible for negotiating and signing the PSCs that govern the country’s oil and gasfield development. BP is the largest foreign investor in Azerbaijan and has been operating there since 1992. In December 2016, it signed letter of intent with SOCAR that will see the company commit to the further development of the Azeri-Chirag-Guneshli (ACG) oilfield  until 2050, 26 years beyond the duration of the existing 30-year production-sharing agreement signed in 1994.

Although Azerbaijan has historically been an oil producer, its significance is growing as a gas producer and exporter. The Shah Deniz field is one of the world’s largest gas and condensate fields and accounts for the majority of Azerbaijan’s natural gas reserves. Operated by BP, Shah Deniz is located 70 kilometres southeast of Baku in water depths of up to 1,600 metres and has approximately 1 tcm (35.3 tcf) of gas in place. The first gas started to flow in 2006. In June 2018, the Shah Deniz Stage 2 project commenced production. Stage 2 is expected to reach a plateau output of 16 bcm (530 bcf) per year along with 120,000 boepd of condensate.

Azerbaijan held proven gas reserves of1.3 tcm (46.6 tcm) as of end-2017 and produced 17.7 bcm (625 bcf) that year. Exports and oil and gas production are key to Azerbaijan’s economy. According to IMF data, oil and gas exports constitute more than 90% of the country’s exports.

While Shah Deniz is the current star, Total’s Absheron field also has a promising future. In November 2016, Total and SOCAR announced they had signed an agreement for the project’s first development phase.

Work is also underway on the Southern Gas Corridor (SGC), which consists of the South Caucasus, Trans-Anatolian and Trans Adriatic pipelines, and will be ready to transport Shah Deniz gas via Georgia, Turkey, Greece, Albania and on to Italy and the rest of Europe by 2020, after gas reaches Turkey in 2018.

For a comprehensive view of Azerbaijan’s market, see our business intelligence platform, TOGYiN. TOGYiN features profiles on companies and institutions active in Azerbaijan’s oil and gas industry, and includes interviews with key players and industry leaders. TOGYiN covers 35 markets worldwide.

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