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

1. FEC

а) Oil and gas production

Azerbaijan produced 42.2 million tons of crude oil and condensate from January to November which is 10.2 percent less than in the period from January to November last year, the Azerbaijani State Statistics Committee announced.

Azerbaijan produced 50.83 million tons of oil in 2010.

The bulk of oil production in 2010 fell to the block of Azeri-Chirag-Guneshli offshore fields and gas condensate field Shah Deniz.

Gas production amounted to 23.77 billion cubic meters in Azerbaijan in January to November, which is 2.6 per cent less 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 November:

BP, SOCAR and BOTAS ratified a package consisting of 14 agreements that support the BTC operations and the full development of "Shah Deniz" gas field.

BP (operator developing the block of offshore fields "Azeri-Chirag-Guneshli" in Azerbaijan) has completed the work and launched the platform "Eastern Azeri". Its activity was suspended within the program on technical maintenance of three extractive platforms in the Caspian Sea, and also stopped the work of the "Western Azeri" platform for technical maintenance.

Caspian Geophysical company began three-dimensional geophysical studies on the prospective block "Shafag-Asiman" in the Azerbaijan sector of Caspian Sea. Together with BP it is a participant of the contract for this block.

SOCAR began installing new drilling rigs at the platforms located in the shallow part of the "Guneshli" field, developed by SOCAR independently.

b) Refinery

In January-November, Azerbaijan processed over 5.78 million tons of oil compared to about 5.7 million tons in January-November 2010, SOCAR, which owns two refineries.

The largest volume of production fell to diesel fuel - about 2.14 million tons.

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:

Oil products

January - November

2010

January - November

2011

Gasoline - total

1326,31

1339,63

- auto petrol

1139,69

1173,89

- Straight-run gasoline

186,62

165,74

Diesel fuel

2215,06

2137,44

Furnace oil

198,77

212,17

Oil bitumen

222,39

241,12

Oil coke

371,17

246,34

Lubricants

78,24

84,84

Liquefied gas

194,40

197,76

Motor fuel DT

59,15

132,63

Total

5696,56

5781,97

c) Sale

About 4 million tons of oil products were sold to the internal market of Azerbaijan in January-November 2011 compared to 3.6 million tons during the same period of 2010, the Azerbaijani State Statistics Committee.

Over 1.07 million tons of the total volume of oil products fell to petrol, or 11.6 percent more than in Jan.-Nov. 2010. The wholesale price for one ton of А-92 gasoline in the internal market (VAT and transportation costs inclusive) is 670 manat and А-95 - 736 manat.

According to the State Statistics Committee, Azpetrol received 413,030 tons of gasoline, LUKOIL - about 152,340 tons, SOCAR Petroleum 317,550 tons in Jan.-Nov.

About 959,800 tons of diesel fuel were sold to the domestic market in Jan.-Nov., or 16.5 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 over 220,750 tons of diesel fuel, SOCAR Petroleum- over 192,920 tons and LUKoil - 93,100 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 filling stations in Baku. SOCAR plans to open 100 filling stations in Azerbaijan.

About 223,600 tons of fuel oil were sold to the domestic market in Jan.-Nov., which is 7.3 percent less than the figure in the same period of 2010.

A total of 486,400 tons of aviation kerosene were sold in Jan.-Nov. 2011, or 9.8 percent more than in Jan.-Nov. 2010. The price of aviation kerosene is 307 manat per ton (including delivery and VAT).

The sale of petroleum bitumen totaled 223,100 tons in Jan.-Nov., or 6.6 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 122,500 tons of liquefied gas were sold on the interior market in Jan.-Nov., or 66 percent more than in Jan.-Nov. 2010.

About 894,700 tons of other oil products were also sold, or 12 percent more than in Jan.-Nov. 2010.

2. Chemical complex

Azerkimya Production Unit (production of chemical products) of the State Oil Company of Azerbaijan (SOCAR) produced 65,400 tons of polyethylene in January-November, which is 43.8 percent more than the same period of 2010, Azerbaijani State Statistics Committee said.

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

Production of basic chemical products:

Products

January-November 2011

Compared to January-November 2010 (%)

Sulfuric acid (thousands tons)

7,7

82,8

Polyethylene (thousands tons)

65,4

143,8

Propylene (thousands tons)

18,8

104,9

Isopropyl alcohol (thousands tons)

10,8

130,9

Paintwork material (tons)

3

78,5

Caustic soda ( liquid in tons )

8,1

174,9

Thus, 7.075.1 tons of solid polyethylene pipes, tubes and hoses were produced in January-November. It is 59.7 percent more compared to the same period of last year. Some 305 tons of porous polyurethane plates and strips were produced in the republic. It is 55.6 percent more than the same period of last year.

In November:

"Azerkimya" Production Association under SOCAR started overhaul of the unit of technical isopropyl, which is one of the main production site of the "Ethylene-polythene" plant. The repair is carried out to increase the production volumes, to improve product quality, to minimize waste production and to prevent possible losses during the production and transport processes.

The work is underway to construct gas facilities on the basis of the Kulevi oil terminal within the project of transporting the chemical products produced by "Azerkimya", namely, liquid polyethylene and polypropylene through the terminal.

3. Power engineering

Azerbaijan generated 17.95 billion kilowatt-hours of electricity in January-November compared to about 6.8 percent more than the same period of last year, the company said.

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