Established by former President Heydar Aliyev, the State Oil Fund of the Republic of Azerbaijan (SOFAZ) is the country’s sovereign wealth fund, charged with managing…READ MORE
Oil reserves7 billion barrels
Oil production795,000 bopd
Gas reserves2.1 tcm
Gas production18.8 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 a 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 PSA 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 of 2.1 tcm (74.2 tcf) as of end-2018 and produced 18.8 bcm (664 bcf) that year. Exports and oil and gas production are key to Azerbaijan’s economy. According to IMF data, oil and gas 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, 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.
All of the latest developments are covered in the new edition of The Oil & Gas Year Azerbaijan series, currently under production.
Lukoil has agreed to acquire an additional 15.5% interest in the offshore Shah Deniz project in Azerbaijan’s Caspian Sea for…READ MORE
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