BAKU, Azerbaijan, March 18. Chairman of the Board of KazMunayGas JSC Magzum Mirzagaliyev, who visited Baku during the state visit to Azerbaijan of Kazakh President Kassym-Jomart Tokayev on March 11-12, in an exclusive interview with Trend stated that KMG offered SOCAR (Azerbaijan's state oil company) to consider projects related to geological exploration in Kazakhstan, increase oil transportation, and possible development of projects in the field of oil and production, Trend reports.
The details of the memorandum signed on March 11 between SOCAR and KazMunaiGas (KMG) in Baku on strategic cooperation on the purchase and sale of Kazakh oil for further processing at oil refineries (refineries) became known. According to an informed source, SOCAR plans to buy certain volumes of oil from KMG for processing at Baku's Heydar Aliyev Refinery for the first time.
The second document signed by SOCAR and KMG in Baku on March 11 was an agreement on a phased increase in the transit of Kazakh oil through the territory of Azerbaijan. According to KMG, there is a phased increase in the volume of transit of Kazakh oil through the territory of Azerbaijan on the route Aktau-Baku-Tbilisi-Ceyhan, up to 2.2 million tons per year. The document also reflects the continuation of the discussion of tariff issues and prospects for the transportation of Kazakh oil through the Baku-Supsa route. KMG and SOCAR concluded an agreement on oil transit along the route Aktau - Baku - Tbilisi - Ceyhan with an annual volume of 1.5 million tons in 2022, and the volume of transit through Baku in 2023 amounted to almost 1.4 million tons of Kazakhstan's oil.
It is planned to transport 1.7 million tons of oil from Kazakhstan through Azerbaijan in 2024, and in 2025 this figure may approach 2.2 million tons per year, an informed source exclusively told Trend based on agreements reached in Baku between SOCAR and KMG.
KMG, in turn, informed that within a month SOCAR is expected to clarify the proposal on pumping Kazakh oil through the Baku-Supsa oil pipeline, which has been idle for almost 2 years and has a capacity of 5 million tons of oil per year. Continuing the topic of using the Baku-Supsa pipeline, Georgian Economy Minister Levan Davitashvili expressed hope on March 12 that oil transportation through the Baku-Supsa pipeline will resume in 2024, probably with Kazakhstan's oil. He also assumed that oil transshipment on this route would exceed one million tons.
KazTransOil JSC (the national operator of the main oil pipeline in Kazakhstan) reported that the volume of oil transportation from Kazakhstan's Tengiz field through the territory of Azerbaijan (through the Baku-Tbilisi-Ceyhan oil pipeline, BTC) amounted to 232,000 tons from January through February 2024.
The State Statistics Committee of Azerbaijan announced the total volume of transit oil pumping in Kazakhstan and Turkmenistan through BTC for January-February 2024 - 842,900 tons (an increase of 34.5 percent to January-February 2023). This volume amounted to 17.8 percent of the total volume of oil pumped through BTC for the two months of 2024 from all sources.
Overall, the volume of oil pumping through the Baku-Tbilisi-Ceyhan (BTC) pipeline in January-February 2024 amounted to 4.725 million tons, which is 2.1 percent more than in the same period of 2023,
The State Statistics Committee also reported that production of oil with gas condensate in Azerbaijan from January through February 2024 amounted to 4.773 million tons, which is 6.7 percent lower than from January through February 2023. At the same time, production of commercial oil with condensate amounted to 4.762 million tons (a decline of 6.7 percent).
In turn, the Ministry of Energy of Azerbaijan reported that the daily production of oil with condensate in Azerbaijan in February 2024 amounted to 598,000 barrels, the same as in January 2024. Of this volume, 476,000 barrels accounted for crude oil and 122,000 barrels for condensate (in January, condensate accounted for 124 thousand barrels per day and 474,000 barrels for crude oil).
The International Energy Agency (IEA) said this week that Azerbaijan's oil production in 2024 will average 0.62 million barrels.
OPEC, on the other hand, is more optimistic. According to its forecasts published this week, Azerbaijan's hydrocarbon production in 2024 will grow by 15,000 barrels per day to an average of 0.7 million barrels per day. But production growth will depend on projects such as Shah Deniz, Absheron, and Umid-Babek. The country's hydrocarbon production is forecast to increase slightly in 2025, by about 10,000 barrels per day. OPEC forecasts that production growth at projects such as ACG and Umid-Babek will offset declines in other mature fields in 2025.
The U.S. Energy Information Administration (EIA) believes that oil production in Azerbaijan in 2025 will amount to 0.64 million barrels per day.
Meanwhile, part of the oil produced in the country is traditionally used for refining to produce oil products. The State Statistics Committee reported that Azerbaijan produced 812.4 million manat ($477.7 million) worth of oil products in January-February 2024, which is 6.6 percent more than in January-February 2023. The Heydar Aliyev Oil Refinery in Baku (the only oil refinery in the country) produced 248,900 tons of motor gasoline (up 14.8 percent), 383,600 tons of gasoil (diesel fuel) (up 7.8 percent), 102,700 tons of jet fuel (up 19.8 percent), and 32,100 tons of oil bitumen (up 58.9 percent). These are the main and most demanded types of petroleum products.
Oil and gas production issues were at the center of attention this week during the visit of new bp CEO Murray Auchincloss to Baku. As part of his talks in Baku, the current activities and prospects for further development of the world-class Azeri-Chirag-Guneshli and Shah Deniz fields were discussed.
Shah Deniz currently constitutes the resource base of gas production in Azerbaijan. The State Statistics Committee of the country reported that the total gas production in Azerbaijan in January-February 2024 amounted to 8.246 bcm, which is three percent more than the indicator of the same period in 2023. At the same time, the production of marketable gas (gas for all types of consumers inside and outside the country) amounted to 6.3 bcm (4 percent growth).
Gas is a raw material for the production of urea (nitrogen fertilizers) at the Sumgayit plant "SOCAR Carbamide". The State Statistics Committee this week reported that from January through February, urea output was 111,100 tons, 69.9 percent higher than the same period in 2023. Also, gas as a raw material is fed to the state oil company's (SOCAR) SOCAR Methanol LLC to produce methanol. According to the State Statistics Committee, this plant produced 94.9 thousand tons of methanol (methyl alcohol) from January through February 2024, which is twice as much as in the same period of 2023.
The Energy Ministry also reported that Azerbaijan exported 4.1 bcm of gas during this period, which is similar to the figure for the first two months of 2023. Out of this volume, 2.1 bcm was exported to Europe, 1.4 bcm to Türkiye (of which 0.8 bcm through TANAP), and 0.6 bcm to Georgia.
A source in the Bulgarian Energy Ministry told Trend this week that Bulgaria is interested in increasing gas supplies from Azerbaijan to the EU through the Southern Gas Corridor (SGC) and in discussing the development of existing and new gas fields in Azerbaijan.
The Bulgaria-Serbia Interconnector (IBS) became operational in December 2023 and Serbia has become more actively involved in the Southern Gas Corridor project. A source in the Serbian Ministry of Energy told Trend this week that the Balkan country has started to work purposefully to ensure the supply of Azerbaijani gas to other European countries. The transportation of Azerbaijani gas to Serbia physically began in January 2024 through the South Gas Complex, the Greece-Bulgaria interconnector, and further IBS.
Baku hosted talks between Azerbaijan and Croatia this week, in particular on the purchase of Azerbaijani oil and gas by Croatia.
To note, SOCAR is participating in discussions on Croatia's initiative to establish the Ionian-Adriatic Pipeline (IAP). In an interview with Trend, Ambassador Extraordinary and Plenipotentiary of Croatia to Azerbaijan Branko Zebic noted that Croatia is trying to promote and raise interest in this project from Bosnia and Herzegovina, Montenegro, and Albania, as the realization of this project could be relevant for Southeast Europe. The ambassador added that the EU has other ideas, and after the election to the EU structures this year (new European Commissioners are elected in June) there will be more clarity on the IAP project.
Regarding the supply of Azeri oil by Croatia, the country is among the top countries that buy Azeri oil both for its own needs and for transit. Oil transit is provided by the Croatian company "JANAF", which this week held talks in Baku and offered SOCAR to expand cooperation.
It became known this week that Rosatom, which ranks first in the
world in terms of order portfolio for construction of nuclear power
plants and other activities in the energy sector, expressed
interest in cooperation with Azerbaijan. "Rosatom has the
capabilities and experience to implement nuclear power projects on
any model.
"We are ready to cooperate in this direction in case of interest
from Azerbaijani partners," Rosatom told Trend.
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