Review of oil and gas operations in Azerbaijan ( january-september 2011)

OIL AND GAS

1. FEC

а) Oil and gas

In January-September Azerbaijan produced about 35.5 million tons of oil and condensate, or 7.5 percent less compared to the figure in January-September of 2010, the Azerbaijani State Statistics Committee said.

Total production in 2010 was 50.83 million tons of oil.

The main part of oil production in 2010 fell to Azerbaijan International Operating Company and gas condensate field Shah Deniz.

Gas production amounted to 19.37 billion cubic meters in Azerbaijan in January to September, which is 2.6 per cent more than the same period of last year.

The country produced 26.23 billion cubic meters of gas in 2010, of which 16.67 billion fell to exports.

In September, the French Total jointly with its partners discovered large gas reserves as a result of drilling on X-2 appraisal well of the "Absheron" offshore gas condensate field in the Azerbaijani sector of the Caspian Sea. According to preliminary estimates, potential reserves of the field are 350 billion cubic meters of gas and 45 million cubic meters of condensate.

A tender was announced in September to select a contractor who will prepare a feasibility study for the Azerbaijan-Georgia-Romania Interconnector (AGRI) project, one of the additional routes for gas supplies, which is considered by SOCAR to diversify routes for gas transportation to Europe.

b) Refinery

In January-September, Azerbaijan processed over 4.78 million tons of oil compared to about 4.7 million tons in January-September 2010, SOCAR, which owns two refineries, said.

The largest volume of production fell to diesel fuel - about 1.78 million tons compared to over 1.84 million tons in January-September 2010.

Oil products are produced at two Baku refineries with capacity of 20 million tons of oil per year.

The table reflecting oil products production in thousand tons:

c) Sale

The State Statistics Committee reported that 3.2 million tons of oil products were sold in the domestic market of Azerbaijan in January-September 2011 compared to 2.8 million tons in the same period of 2010.

About 863,000 tons of the total volume of oil products was petrol. During this period sale of gasoline was 11.4 percent more than in January-September 2010. The wholesale price for one ton of А-92 gasoline in domestic market (VAT and transportation costs inclusive) is 670 manat and А-95 - 736 manat. According to the State Statistics Committee, Azpetrol received about 334,000 tons of gasoline, LUKOIL - about 126,000 tons, SOCAR Petroleum over 248,500 tons in Jan.-Sept.

Some 773,000 tons of diesel fuel was sold in the domestic market in Jan.-Sept, which is 18 percent more compared to the same period of 2010. The wholesale cost of 1 ton of diesel fuel (VAT and transportation costs inclusive) is 485 manat. Azpetrol received 177,800 tons of diesel fuel, SOCAR Petroleum- over 160,000 tons and LUKoil - about 78,100 tons, the state statistics agency reported.

Azpetrol has 70 filling stations in Azerbaijan, of which 66 - petrol, 4 - gas stations. An oil tank farm with total capacity of 7,000 tons and car park, meeting international standards was commissioned in 1999 to improve fuel quality, ensure uninterrupted operation of filling stations and improve the quality of customer service. Currently, Azpetrol fleet consists of 110 fuel tankers with capacities ranging from 17 to 42 tons, which provide the company's filling stations with fuel. Azpetrol owns approximately 15 percent of the total number of filling stations in the country. The company's share in the relevant market sector is more than 50 percent.

At present, SOCAR Petroleum has several gas stations in Baku. SOCAR plans to open 100 filling stations in Azerbaijan. SOCAR plans to open a total of 30 gas stations throughout Azerbaijan.

Some 185,200 tons of fuel oil was sold in the domestic market in Jan.-Sept, which is 4.9 percent more than the figure in the same period of 2010. The wholesale price of 1 ton of М-40 fuel oil in Azerbaijan is 100 manat (including delivery and VAT).

A total of 401,600 tons of aviation kerosene was sold in January-Sept.2011, or 12.3 percent more than in January-September 2010. The price of aviation kerosene is 307 manat per ton (including delivery and VAT).

The sale of petroleum bitumen totaled 187,000 tons in Jan.-Sept., or 14.9 percent more than the same period of 2010. The wholesale price of 1 ton of bitumen BN 60/90 (VAT and transportation costs inclusive) is 160 manat.

About 101,300 tons of liquefied gas was sold in the domestic market in Jan.-Sept., or 73.2 percent more than in January-September 2010.

Some 685,300 tons of other oil products were also sold, or 16.3 percent more than in January-September 2010.

2. Chemical complex

Azerkimya Production Unit (production of chemical products) of the State Oil Company of the Azerbaijan Republic (SOCAR) produced 51,400 tons of polyethylene in January-September, which is 74.9 percent more than the same period of 2010.

An increase was observed in all basic chemical products produced by Azerkimya in January- September.

Production of basic chemical products:

Thus, 5.148.4 tons of solid polyethylene pipes, tubes and hoses were produced in January-September. It is 35.4 percent more compared to the same period of last year. Some 180 tons of porous polyurethane plates and strips were produced in the republic. It is 3.7 percent less than the same period of last year

In September, work continued on laying a pipeline between Heydar Aliyev Baku Oil Refinery and Azerkimya Production Unit to transport straight-run gasoline for processing.

Export of chemical products of Azerkimya to Turkey, whose share in total exports is more than 50 percent, continued in September.

In September, Azerkimya began dismantling of the plant of surface-active substances on its balance. The decision was taken due to the fact that this enterprise caused great harm to the environment.

3. Power engineering

About 14.58 billion kilowatt-hours of electricity was generated in January-September, which is 5.2 percent more than the corresponding period of 2010.