Oil and gas: Azerbaijan

Overview

• Azerbaijan is among the oldest oil producers in the world.
• Oil and natural gas production and export are central to economic growth.
• The country is one of the Caspian region’s most important strategic export routes to the West.
• Azerbaijan’s importance as a natural gas supplier will grow in the future as field development and export infrastructure expand.
• Natural gas accounted for approximately 67% of total domestic energy consumption in 2012.
• Oil accounted for 30% of total energy use in 2012.
• Overall, Azerbaijan is a net energy exporter.
• The country swaps small volumes of natural gas with Iran.
• More than 90% of total exports are accounted for by oil and gas.

Oil and oil products

• As of January 2014, proven crude oil reserves were estimated at 7 billion bbls.
• In 2013, Azerbaijan produced 881 000 bpd of petroleum and other liquids and consumed approximately 85 000 bpd.
• The world’s first paraffin factory was opened in Azerbaijan in 1823.
• Almost immediately following its independence in 1991 from the Soviet Union, the country allowed foreign participation in its oil sector.
• In general, hydrocarbons are produced under production sharing agreements.
• SOCAR produces approximately 20% of the country’s oil output.
• SOCAR’s Geneva based subsidiary Socar Trading markets much of the oil.
• The industry is regulated by the Ministry of Industry and Energy.
• Oil production increased from 315 000 bpd in 2002 to 1 million bpd in 2010.
• Production has declined since 2010, falling to 932 000 bpd in 2012 and 881 300 bpd in 2013.
• The EIA expects production to drop to 852 000 bpd this year.
• Azerbaijan produces three grades of crude oil. SOCAR produced bbls, Azeri BTC and Azeri Light.
• The country exported approximately 738 000 bpd of crude in 2013.
• Crude oil exports peaked in 2010, but have fallen every year since as production has declined.
• Azerbaijan is mainly a crude oil and condensate exporter.
• The majority of refined products exported go to Russia and Georgia.
• As of January 2014, there was a crude oil refining capacity of 399 000 bpd.
• Crude oil is refined domestically by two refineries.
• The Baku refinery has a capacity of 239 000 bpd and the New Baku refinery at 160 000 bpd.

Natural gas

• In January this year, proven natural gas reserves were approximately 35 trillion ft³.
• In 2012, Azerbaijan produced 607 billion ft³ of dry natural gas and consumed 379 billion ft³.
• Natural gas plays a critical role domestically and its importance is likely to grow in the future.
• Azerigaz, a SOCAR subsidiary, is responsible for natural gas, processing, transport, distribution and storage, mainly in the domestic market.
• Azerbaijan became a net exporter of natural gas in 2007.
• In 2013, Azerbaijan exported approximately 240 billion ft^3.
• Most of the natural gas exported is destined for Turkey, but some small supplies go to Greece.

Adapted by Claira Lloyd