BAKU, Azerbaijan, January 7. The share of the oil and gas sector in Azerbaijan's Gross Domestic Product (GDP) at a base oil price of $60 per barrel from 2024 through 2027, may decrease by 7.4 percent, Trend reports via a source in the government.
The government anticipates the share of the oil and gas sector in Azerbaijan's nominal GDP to make up 28 percent, and 33.12 billion manat ($19.48 billion) this year given the specified calculated oil price (used for macroeconomic forecasts and the state budget calculation).
The rate of decline in the oil and gas GDP is expected to be 1.7 percent.
In 2025, the share of the oil and gas industry in the country's GDP may be 26 percent (32.31 billion manat or $19 billion) with a rate of decline of 1.5 percent.
In 2026, the share of the oil and gas industry in the overall GDP may decrease to 22.7 percent (29.27 billion manat or $17.2 billion). The industry is expected to decline at a rate of 3.1 percent.
In 2027, the situation is expected to stabilize, and the rate of decline in the oil and gas GDP is forecasted to be 0.8 percent. Its share in the total GDP may only be 20.6 percent (27.9 billion manat or $16.4 billion).
"The decline in the oil and gas GDP is mainly associated with a decrease in oil production in the Azeri-Chirag-Guneshli block due to natural geological reasons. However, during 2024-2027, an increase in condensate extraction is expected in the country, which is intended to offset the decrease in oil production," the source said.
Furthermore, Azerbaijan anticipates an increase in gas production at the key Shah Deniz field, as well as at the Absheron, Umid, and other fields.
"Namely due to these expectations, the decline in oil GDP will decrease by 2028," said the source.
The source also mentioned that actual market prices for oil from 2024 to 2027 could be higher than $60 per barrel, which could adjust the indicators for the oil GDP in the overall GDP.
Azerbaijan's Azeri-Chirag-Gunashli block of fields has reserves of one billion tons of oil, with over 55 percent extracted by the present time.
Reserves of Shah Deniz are estimated at 1.2 trillion cubic meters, and so far, less than 20 percent has been extracted.
"The government is taking steps to diversify the economy, and the reduction in the oil and gas sector may be compensated by the development of other industries," added the source.
Azerbaijan's nominal GDP from January through November 2023 amounted to 110.2 billion manat ($64.8 billion).