Oil and gas operations in Azerbaijan as of Dec. 2010

Azerbaijan, Baku, Dec. 20 / Trend /

Total oil and gas production in Azerbaijan

In January-November, more than 47.1 million tons of oil and condensate , which was1.6 percent more compared to the same period of 2009, were extracted in Azerbaijan.

The major volume of oil production was being carried out by the Azerbaijan International Operating Company (AIOC) during January-November 2010. As of mid. December, it extracted 42.6 million tons of oil at the block of offshore fields of Azerbaijani-Chirag-Guneshli.

More than 24.5 billion cubic meters of gas were extracted in Azerbaijan in the January-November period, an increase of 13.8 percent compared to 2009. As of mid-December, roughly 6.8 billion cubic meters of gas was extracted from Shah Deniz field.

Oil and gas extracted by the State Oil Company of the Azerbaijan Republic (SOCAR)

In January-November, Oil and Gas Production Management of the State Oil Company of the Azerbaijan Republic (SOCAR) extracted about 49.3 million barrels (equaling over 6.7 million tons) in offshore and onshore fields of the country, compared to over 49 million barrels (about 6.69 million tons) in January-November 2009.

SOCAR received about 7 billion cubic meters, compared to about 6.67 billion cubic meters during the same period of last year. SOCAR's Oil and Gas Production Management extracted about 6.4 billion cubic meters of gas. Joint ventures and operating companies which produce natural gas onshore delivered 91 million cubic meters of gas to SOCAR in January-November.

Azerbaijan International Operating Company (AIOC) extracted over 3.1 billion cubic meters of associated gas in the field "Azerbaijani-Chirag-Guneshli" in January-November for SOCAR compared to over 3.6 billion cubic meters during the same period last year.

Searching and exploitation drilling of SOCAR

SOCAR continues drilling of new exploitation wells and exploratory drilling to find new productive fields and prospects along with hydrocarbon production.

The company announced the opening of a huge gas condensate field Umid in the Azerbaijani sector of the Caspian Sea in November.

According to experts of SOCAR, the volume of reserves on the field is 250 billion cubic meters of gas and 40 million tons of condensate.

The State Oil Company of the Azerbaijan Republic (SOCAR) plans to commence drilling at a second exploratory well at the major Umid gas field in the Azerbaijani sector of the Caspian Sea in mid-2011. All the peculiarities of the deposits, which were identified in the process of drilling the first well, will be taken into account while drilling the second one.

The Umid Field is located 75 kilometers from Baku and around 40 kilomters from land. In 1953, the first geophysical works were carried out at the field and were repeated in 1972 in a somewhat improved form. From 1977 to 1992, nine wells were drilled without result.

All the operations within the exploration on the field Umid were carried out by SOCAR at its own expense. The company intends to continue exploration work on other structures in the future, in particular on the structure "Babak".

SOCAR (except joint ventures and operating companies) drilled 128.955 meters in January-November 2010 compared to about 155.412 meters over the same period in 2009. It drilled 202.900 meters in 2008 compared to 190.370 meters in 2007.

Azerbaijan imports metal pipes to conduct onshore and offshore operations. According to the State Statistics Committee, the rate of pipe import was 128.800 tons in January-October or 6.9 percent more compared to the same period of last year. During this period, the tubes were imported at the rate of $195 million, or 8.2 percent less compared to the same period of 2009.

Oil and oil products processing by SOCAR

The State Oil Company of the Azerbaijan Republic (SOCAR) intends to process 6.4 million tons of oil in 2011 compared to 6.18 million tons this year.

Azerbaijani refineries processed roughly 5.7 million tons of oil in Jan.-Nov. compared to 5.5 million tons for the same period of last year.

The largest volume of production fell to diesel fuel - more than 22.1 million tons in January-November compared to over 2 million tons in January-November last year.

Azerbaijan has two refineries with total capacity of 20 million tons per year. SOCAR provides the plants with the oil extracted onshore and offshore at its own expense.

Oil products in Azerbaijan in January-November (in tons):

Export and sale of oil products on Azerbaijani domestic market

A part of oil products in Azerbaijan is sold on the domestic market whereas the other part is exported.

Roughly 3.6 million tons of oil products were sold on the internal market of Azerbaijan in January-November 2010, 3.8 million tons more compared to the same period of 2009.

About 961,700 tons of the total volume of oil products fell to petrol, which was sold at an amount of more than 6.3 percent for this period compared to January-November 2009. The wholesale price for one ton of А-92 gasoline on the domestic market (VAT and provision costs inclusive) is 670 manat and А-95 - 736 manat. According to the State Statistics Committee, Azpetrol received over 435,650 tons of gasoline, LUKOIL about 150,600 tons and SOCAR Petroleum around 194,200 tons.

In January-November, about 823,800 tons of diesel fuel were sold in the domestic market, which is 15.7 percent higher than the same period of 2009. The wholesale cost of 1 ton of diesel fuel (VAT and provision costs inclusive) is 485 manat. According to the State Statistics Committee, Azpetrol received roughly 199,360 tons of diesel fuel, SOCAR Petroleum received 131,000 tons and LUKoil got  roughly 91,440 tons. The Azerbaijani State Caspian Sea Shipping Company received 20,600 tons of diesel fuel.

About 241,100 tons of fuel oil was sold in the domestic market during January-November, which is 9.9 percent less than the figure for the same period of 2009. The wholesale price of 1 ton of М-40 fuel oil in Azerbaijan is 100 manat (including provision and VAT).

A total of 443,200 tons of aviation kerosene was sold in January-November, 27.1 percent greater than the quantity for the same period of 2009. The price on aviation kerosene is 307 manat per ton (including provision and VAT).

The sale of petroleum bitumen totaled 209,300 tons during January-November, or 0.5 percent less than the same period of 2009. The wholesale price of 1 ton of bitumen BN 60/90 (VAT and provision costs inclusive) is 160 manat.

In terms of liquefied gas, about 73,800 tons of were sold in the domestic market in the January-November period, 6.8 percent less than the quantity extracted during the same period last year.

More than 798,800 tons of other oil products were also sold on the domestic market,11 percent less than the quantity produced in the same period of 2009.

In January-November 2010, SOCAR exported about 1.72 million tons of petroleum products from its own refineries compared to about 1.85 million tons for the same period of 2009.

In November SOCAR exported 118,200 tons of petroleum products compared to 123,400 tons last November.

Summary table of export of oil products:

Gas supplies on Azerbaijani domestic market

SOCAR transferred about 1.5 billion cubic meters of gas to Azerbaijani population in January-November, supplying them with 133.5 million cubic meters of gas in November alone.

The company, which supplied industrial facilities 852.1 million cubic meters of gas for las t November, provided November - 97.2 million cubic meters of gas during November 2010.

Municipal budget enterprises were supplied with 178.4 million cubic meters of gas in January-November, with the figure reaching 12.5 million cubic meters by the end of this period.

SOCAR supplied the State Energy Agency of Nakhchivan Autonomous Republic with 111 million cubic meters of gas in January-November. The figure was 24.3 million cubic meters in November.

All gas operations within the country are carried out by the Industrial Association of Azerbaijani Gas, which is a part of SOCAR, also supplying gas to Azerbaijani power stations to generate electricity.

JSC Azerenergy (production and distribution of electricity in Azerbaijan) received over 3.58 billion cubic meters of gas in January-November this year compared to over 3.92 billion cubic meters in January-November 2009 to be used as fuel.

In November this year, Azerenergy received 377.5 million cubic meters of gas compared to 310.3 million cubic meters in November of 2009.

In 2009, Azerenergy got approximately 4.32 billion cubic meters of gas compared to 4.95 billion cubic meters in 2008, while in 2007, this figure amounted to 3.4 billion cubic meters of gas.