BAKU, Azerbaijan, October 26. The share of the oil sector in the Azerbaijani economy in 2050 will account for 10 percent, compared to 29.5 percent in 2020, Trend reports via the "Azerbaijan. Country Economic Memorandum" publication from the World Bank (WB).
"Oil sector output is projected to fall significantly, with production from existing fields expected to decline as fields mature, and investment in new production will be needed to offset this. In 2019, Rystad Energy estimated that planned exploration projects in the Azeri section of the Caspian Sea had the potential to increase Azerbaijan’s recoverable reserves by 4.4 billion barrels per day over the next decade. However, the COVID-19 pandemic has caused delays to exist projects, as well as a sharp decline in oil investment, which will likely negatively affect this expectation," the report said.
According to the WB, moreover, the expectation of weaker growth in oil demand as a result of the global energy transition poses a serious structural problem. While investment in new oil projects will continue to be needed worldwide to replace the natural reduction of existing wells, any future development, It is likely to include lower oil price assumptions and a gradual decline in oil demand over the long term.
As WB believes, due to the abundance of low-cost hydrocarbons, domestic energy consumption in Azerbaijan tends to be much more dependent on fossil fuels than in other countries.
Fossil fuels account for 97.5 percent of domestic energy consumption in Azerbaijan, of which about two-thirds are natural gas and one-third oil, and renewable energy sources account for only 2.5 percent, the report noted.
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