Review of oil and gas operations in Azerbaijan (january-june 2015)

1. FEC

а) Oil and Gas Production

Totally, 20.97 million metric tons of oil and gas condensate were produced in Azerbaijan in January-June 2015, which is 1.7 percent less than in January-June 2014, the State Statistics Committee's report said.

Some 41.9 million metric tons of oil and gas condensate were produced in Azerbaijan in 2014, compared to 43.1 million metric tons of oil and gas condensate in 2013.

The major part of the oil was produced at Azeri-Chirag-Guneshli block of oil and gas fields and Shah Deniz gas and condensate field that is being developed jointly with the foreign partners.

The commercial gas production in Azerbaijan stood at 10.19 billion cubic meters in January-June 2015, or 10.9 percent more than in the same period of 2014.

This is while the commercial gas production in the country in 2014 totaled 18.7 billion cubic meters, compared to 17.9 billion cubic meters in 2013.

The State Oil Company of Azerbaijan (SOCAR) produced 4.14 million metric tons of oil from the country's onshore and offshore fields in January-June 2015.

Thus, the company produced 1.4 percent less oil compared to January-June 2014 (4.2 million metric tons), the statement said.

SOCAR produced 3.37 billion cubic meters of gas in January-June 2015 or by 6.4 percent (3.6 billion cubic meters) less than in the same period of 2014.

SOCAR (excluding the joint enterprises and operating companies) carried out drilling work in the volume of 53,436 meters in January-June 2015 or by 25.9 percent less than in the same period of 2014 (72,130 meters).

This is while the development drilling accounted for 52,436 meters of the total volume of drilling work carried out by SOCAR in January-June 2015, and exploration drilling accounted for the remaining 1,000 meters.

SOCAR has commissioned 35 new wells since early 2015, the message said.

The drilling contractor, SOCAR-AQS, of which 51 percent of shares is held by Azerbaijan's state oil company SOCAR, has finished drilling of a new well at the Gunashli field in the shallow part of Caspian Sea.

"The well No. 344 at the Guneshli field has been drilled from the fixed offshore platform No.11,"said the company. "The well No.344 has been drilled up to the 'Fasila' suite, and its design depth is 3,128 meters. According to the plan, the daily production rate of the well will be 60 metric tons."

Currently, SOCAR-AQS mainly conducts drilling from the fixed platform No. 11 in the shallow part of the Guneshli field, as well as from the platform No. 1 at the Umid field.

SOCAR has completed drilling a new well on Zig-Hovsan field block, which is being developed by Absheron Operating Company Limited.

Participants of the PSA contract for development of the block of Zig-Hovsan onshore fields are SOCAR (25 percent) and the Russneft Absheron Investments company (75 percent).

- SOCAR Drilling Trust commissioned a new high-output gas condensate well in the Bulla Deniz offshore field, which is on the balance of SOCAR. The daily production rate of the well No 124 is 1.25 million cubic meters of gas and 250 tons of condensate.

- SOCAR Drilling Trust put into operation a new well at the Chilov offshore field. The daily production rate of the well No 113 is 4,000 cubic meters of gas and 50 tons of oil.

b) Processing

Azerbaijan produced 1.48 million metric tons of diesel fuel in January-June 2015, or 21.7 percent more than in the same period of 2014, the country's State Statistical Committee said in its report on H1 of 2015.

Currently, SOCAR is modernizing its processing facilities, as the fuel consumption has increased in the country.

Almost 3.1 million metric tons of petroleum products was produced in Azerbaijan in January-June 2015, compared to over 2.2 million metric tons in H1 of 2014.

Below is the summary table of petroleum products' output in Azerbaijan:

The processing capacity of the Heydar Aliyev Baku Oil Refinery will increase from 6 to 7.5 million tons per year after the reconstruction, the head of the plant Elman Ismayilov said. The volume of output of oil products and their quality will increase thanks to the modernization. This will allow producing Euro-5 gasoline. At present, the oil refining depth hit 96.5 percent at the enterprise.

2. Chemical complex

Azerbaijan produced 48,300 metric tons of polyethylene in H1 of 2015, or 25.6 percent more than in the same period of 2014, the report said.

Moreover, 27,400 metric tons of polypropylene were produced in Azerbaijan in January-June, or 13.4 percent more than in the same period of 2014.

During the reporting period, Azerbaijan produced 28,400 metric tons of barium sulfate, or 40.3 percent more than in H1 of 2014.

The report said that the country produced 4,530 metric tons of isopropyl alcohol, or 4.7 times more than in the same period of 2014.

In general, the report said that Azerbaijan saw growth in the production of majority of main chemical products in the first six months of 2015.

Output of main types of chemical products:

The country produced 6,900 metric tons of solid polyethylene pipes, tubes, hoses in January-June, or 21.2 percent less than in H1 of 2014.

SOCAR and Russia's Gazprombank have signed an agreement to finance the construction of plants for production of polypropylene and high density polyethylene by SOCAR Polymer company in Azerbaijan.

The Investment Committee of Gazprombank approved allocating $489 million worth loan for SOCAR Polymer.

3. Electricity

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Azerbaijan produced 11.68 billion kilowatt hours of electricity in H1 of 2015, or 2.5 percent more than in the same period of 2014, the report said.

Of the total volume of electricity production, 11.14 billion kilowatt hours accounted for commercial electricity, which is 2.5 percent more than in the same period of 2014.

Moreover, around 10.23 billion kilowatt hours of the total volume of commercial electricity produced in January-June 2015 accounted for thermal electricity (91.8 percent of the total volume of electricity production), which is 1.2 percent more than in the same period of 2014.

Azerbaijan's hydro power plants produced 911.3 million kilowatt hours of commercial electricity in January-June, which is 20.3 percent more than in the same period of 2014.

Wind power generation facilities produced 3.6 million kilowatt hours of electricity in January-June 2015.

Azerbaijan produced 23.11 billion kilowatt hours of electricity in 2014, or 6.7 percent more than in 2013. Of the total volume of electricity production, 21.93 billion kilowatt hours accounted for commercial electricity in 2014, or 6.3 percent more than in the same period of 2013.

Hydro power plants produced 1.23 billion kilowatt hours of commercial electricity in 2014, or 10 percent less than in 2013.

The generation capacity of Azerbaijan's power supply system has increased by 30 percent over the last five years. Currently, its capacity is 7,105 megawatt. This generates around 24 billion kilowatt hours of electricity and export 2.1 billion kilowatt hours of electricity annually.