BAKU, Azerbaijan, February 12. Azerbaijan may in many cases even double the volume of oil production from its mature fields, Vladimir Rogov, Managing Director and Partner, Boston Consulting Group (BCG) told Trend.
He pointed out that much of Azerbaijan’s mature oil fields reached their peak performance years ago.
“The upstream sector in Azerbaijan has already encountered challenges, as oil production is showing signs of decline, while gas output is reaching a plateau. Unlike newer fields worldwide, these assets have not yet benefited from modern extraction technologies. Implementing these could unlock their maximum potential, prolong field life, and enhance output without the need for massive new investments,” said Rogov.
The managing director went on to add that a recent global BCG study explores further the challenges of declining profitability and strategies to boost production while cutting costs.
“Here are some valuable insights:
- Upstream operating costs are expected to reach $700 billion per year by 2030, with cost inflation rising about 25% since 2020 - Despite cost-saving initiatives, many companies struggle to achieve sustainable impact - A structured approach can achieve cost reductions of up to 30%,” he explained.
Rogov noted that the approaches outlined in the BCG study emphasize minimizing production losses and unscheduled deferments within current operational capabilities, while also boosting production potential through advanced recovery technologies and operational strategies.
He believes that for Azerbaijan, this is even more relevant than for many global O&G companies.
“The country’s mature fields hold tremendous untapped potential, while efforts to optimize production and cut costs are still in the early stages. We have only just begun exploring the "low-hanging fruits" of production optimization and cost efficiency. Global industry typically expects 2-5% production increases through efficiency measures. Azerbaijan may unlock a unique opportunity, where the heritage and conditions of its mature fields make doubling output in many cases well within reach. By prioritizing production optimization, cost-cutting, and asset revitalization, we can enhance the utilization of existing reserves like never before.
As oil production and gas output reach their plateaus, optimization strategies can play a key role in ensuring energy security and shaping the future of the energy sector,” Rogov concluded.
The data from Azerbaijan’s Ministry of Energy shows that oil and condensate production in 2024 totaled 29.1 million tons, with 24.4 million tons exported.
As of January 1, 2025, Azerbaijan’s proven oil reserves stand at 7 billion barrels.
The Azeri-Chirag-Guneshli (ACG) block accounts for the majority of Azerbaijan’s oil production. In 2024, oil output from ACG was estimated at 125 million barrels, with a further decline to 123 million barrels expected in 2025.