Review of oil and gas operations in Azerbaijan (January-April 2017)

1. FEC

а) Oil and Gas Production

In January-April 2017, 12.64 million tons of oil and gas condensate were produced in Azerbaijan, which is 9.5 percent less than in the same period of 2016, according to a report of the country’s State Statistics Committee.

In 2016, 41.03 million tons of oil and gas condensate were produced in Azerbaijan, which is by 1.5 percent less than in 2015.

The main volume of oil production in Azerbaijan accounts for the Azeri-Chirag-Gunashli (ACG) block of oil and gas fields.

The production of commercial gas in Azerbaijan stood at 6.28 billion cubic meters in January-April 2017, which is 0.2 percent less than in the same period of 2016, according to the State Statistics Committee.

The commercial gas production stood at 18.71 billion cubic meters in Azerbaijan in 2016, as compared to 19.72 billion cubic meters in 2015.

Azerbaijan’s state oil company SOCAR produced 2.46 million tons of oil from offshore and onshore fields in January-April 2017 as compared to 2.52 million tons in the same period of 2016.

SOCAR produces oil from offshore and onshore fields of Azerbaijan using its own funds. Some part of oil is processed at refineries in Baku, while another part is exported via the Baku-Novorossiysk and Baku-Tbilisi-Ceyhan pipelines.

Moreover, SOCAR produces light oil from Azeri-Chirag-Gunashli block of oil and gas fields jointly with foreign partners.

The total volume of the oil produced at the Azeri-Chirag-Gunashli block and the fields developed independently by SOCAR stood at 12.64 million tons in January-April 2017, as compared to 13.98 million tons in the same period of 2016.

SOCAR produced 1.96 billion cubic meters of gas from onshore and offshore fields using its own funds in January-April 2017, as compared to 2.11 billion cubic meters of gas in the same period of 2016.

Meanwhile, SOCAR produces gas from Shah Deniz and Azeri-Chirag-Gunashli (associated gas) fields, developing them jointly with foreign partners.

Total volume of gas produced from the contract fields and fields being developed independently by SOCAR stood at 9.26 billion cubic meters in January-April 2017, as compared to 9.95 billion cubic meters in the same period of 2016.

SOCAR drilled 49,600 meters in January-April 2017 compared to 32,040 meters drilled in the same period of 2016.

Some 45,620 meters accounted for production drilling, while the rest part accounted for exploration drilling in January-April 2017.

SOCAR has commissioned 23 new wells since early 2017.

In January-April 2017, 2.98 billion manat were invested in Azerbaijan’s oil and gas sector, as compared to 3.05 billion manat in the same period of 2016 (2.2 percent decrease), the Azerbaijani State Statistics Committee said in a report.

Azneft Production Union of SOCAR plans to produce 6.3 million tons of oil and 5.5 billion cubic meters of gas from the fields under development in 2017, Azneft Director General Dashgin Iskandarov said in his interview with the Caspian Energy journal.

Iskandarov noted that maintaining the stability of production, as well as the construction of new platforms in order to expand drilling work will be one of Azneft’s main goals in 2017.

“Maintenance of the production at a stable level will be achieved mainly thanks to the drilling continued at the high-potential Gunashli, Bulla Deniz, Western Absheron fields, the construction of new platforms (Platform #12 at the Bulla Deniz field, platform #620 at the Oil Rocks field, platforms #10 and 54 at the Western Absheron field), drilling of new wells, continuation of geological and technical measures at the wells of the transition fund and restoration of idle wells,” said Iskandarov adding that the extensive use of new technologies is also planned.

It is planned to drill branch holes in order to increase oil production from old wells operated for a long time, he added.

b) Processing

Azerbaijan produced 1.65 million tons of oil products in January-April 2017 compared to 1.86 million tons in the same period of 2016, said a report of the Azerbaijani State Statistical Committee.

SOCAR, which is the sole producer of oil products in Azerbaijan, is currently modernizing its processing facilities, as the fuel consumption has increased in the country.

Azerbaijan produced 413,900 tons of gasoline in January-April 2017, which is by 12.2 percent more than in the same period of 2016.

Azerbaijan produced 5.17 million tons of oil products in 2016 compared to 5.45 million tons in 2015.

Below is the summary table of the output of oil products in Azerbaijan:

Amec-Foster Wheeler / SOCAR-Foster Wheeler, which is a contractor for detailed design and preparation of project documentation (FEED) as part of the modernization of Heydar Aliyev Baku Refinery, completed work as part of the contract, a source in SOCAR said.

"The FEED stage has been successfully completed,” the source said. “Currently, the companies which will build new units and reconstruct existing ones are being chosen. Licensors of the units were chosen earlier.”

SOCAR signed a contract with Azfen JV for construction of a new bitumen plant at the Heydar Aliyev Baku Oil Refinery.

The capacity of the new bitumen plant will be 400,000 tons of bitumen per year. The plant will produce high-quality road bitumen 40/60.

The plant is expected to be commissioned in the second half of 2018.

2. Chemical complex

In January-April 2017, 18,700 tons of propylene was produced in Azerbaijan that is by 0.1 percent less than in the same period of 2016, says a report of the country’s State Statistics Committee.

Meanwhile, 36,500 tons of polyethylene was produced in Azerbaijan in January-April 2017 that is by 1.7 percent more than in the same period of 2016.

Also, 59,100 tons of iodine (a decline by 2.1 percent as compared to January-April 2016) was produced in Azerbaijan in January-April 2017.

Production of main chemical products:

Azerbaijan will be daily producing 2,000 tons of carbamide in 2018, said Mukhtar Babayev, head of the Azerikimya Production Union.

He made the remarks on the sidelines of ‘The 2nd SOCAR International Caspian and Central Asia Downstream Forum – Trading, Logistics, Refining, Petrochemicals’, held in Baku.

“In addition, in 2018, the daily production of polypropylene will be brought to 500 tons and polyethylene to 600 tons,” Babayev said.

He added that 80 percent of polypropylene and carbamide produced in Azerbaijan will be exported.

3. Electricity

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Power plants of Azerenergy JSC generated 8.01 billion kilowatt hours of electricity in January-April 2017 that is by 4.7 percent more than in the same period of 2016, says a report of the country’s State Statistics Committee.

According to the report, 7.66 billion kilowatt hours of the total electricity generated during the reporting period accounted for commercial electricity, which is 4.1 percent more than in the same period of 2016.

Thermal power plants generated 7.06 billion kilowatt hours of the total commercial electricity generated in January-April 2017, or 4.8 percent more than in the same period of 2016.

Azerbaijan’s hydro-power plants generated 572.7 million kilowatt hours of commercial electricity in January-April 2017, which is by 0.7 percent less than in the same period of 2016.

Wind farms produced 6.4 million kilowatt hours of electricity, while solar power plants – 13.9 million kilowatt hours of electricity in the period.

Azerenergy JSC is the main producer of electricity in Azerbaijan. It has over 200 substations with a capacity of 500, 330, 220 and 110 kilovolt amperes, as well as 10 hydro power plants and 14 thermal power plants.

At present, the generation capacity of Azerbaijan's power supply system is 8,100 megawatts.