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Review of oil and gas operations in Azerbaijan (I Quarter 2013)

Analysis Materials 13 May 2013 15:09 (UTC +04:00)

a) Oil and gas production

According to the State Statistics Committee, in January-March 2013, Azerbaijan produced about 10.78 million tons of oil and gas condensate, or 4.6 percent less than in the same period of 2012.

Gas production in January.-March totalled 4.35 billion cubic meters (excluding associated gas), or 4.8 percent less than in January-March 2012.

Despite the poor performance in the mining sector for the first quarter of 2013, in general the situation in this sector is positive. Thus, the volume of recoverable oil reserves on the block of "Azeri-Chirag-Guneshli" oil and gas fields in the Azerbaijani sector of the Caspian Sea increased by 76 per cent. "If the initial volume stood at 511 million tons, then as a result of exploration work recoverable reserves exceeded 900 million tons," First Vice-President of the State Oil Company of Azerbaijan (SOCAR) Khoshbakht Yusifzade said at the BP's Forum on Technology, which is underway in Baku. Some 151 million tons accounts for profit oil.

The developers of the "Azeri-Chirag-Guneshli" project have received a preliminary contract for deep-lying gas development, SOCAR head Rovnag Abdullayev said. According to him, it was a risk service agreement. The first Azeri-Chirag-Guneshli contract was a production sharing agreement (PSA). More contracts will only increase production volume. International organizations evaluate oil and gas companies in terms of their reserves. Finalizing new types of contracts will allow SOCAR to increase its activity, Abdullayev said. The deep-lying gas reserves in Azeri-Chirag-Guneshli are estimated at 300 billion cubic meters.

b) Refinery

Some 346,700 tons of gasoline was produced in Azerbaijan in January-March 2013, which is 24.3 percent more compared to the same period last year, Azerbaijani State Statistics Committee told Trend.

Azerbaijan produced almost 1.3 million tons of gasoline in 2012, or 0.1 percent more than in 2011.

In January-March this year, Azerbaijan produced about 1.3 billion tons of main oil products.

Summary table of oil production in Azerbaijan:

Production of petroleum products

January-March 2013

In relation to January-March 2012 (in percent)

Gasoline

346,7

124,3

Naphtha

40,4

80,8

Kerosene

175,3

119,6

Diesel fuel

647,8

114,8

Lubricating oil

7,2

45,9

Oil bitumen

75,8

132,5

Date of starting the construction of a new oil and gas processing complex has been announced in Azerbaijan. SOCAR plans to begin construction of a gas processing plant within a new oil and gas processing and petrochemical production complex (OGPC) in September 2013. Construction work will be conducted in the following order: a gas processing plant, oil refinery and in parallel, creation of facilities for petrochemical production.

C) sale

Around 1.18 million tons of oil products were delivered to the Azerbaijani domestic market in January-March 2013 or 15.9 percent more compared to the same period of 2012.

Around 4.8 million tons of petroleum products were delivered to the Azerbaijani domestic market in 2012, or 8.8 per cent more than in 2011.

The committee said that in particular, supplying petrol, diesel fuel, fuel oil, liquefied gas and other petroleum products to the domestic market increased in January-March.

Around 1.57 million tons of Azerbaijani oil products were delivered to consumers (including exports) in January-March or 10.8 per cent more than in January-March last year.

Around 75.1 per cent of the total volume of petroleum products delivered to customers was sold on the domestic market, while the remaining 24.9 per cent went to export.

2. Chemical complex

In January-March 2013, Azerbaijan produced 12,000 tons of aluminium sulphate or barium which is 65.6 per cent more than in the same period of 2012.

An increase was observed in many basic chemical products produced in January.

Production of basic chemical products:

Products

Jan.-March 2013

Compared to Jan.-March 2012 (%)

Aluminium sulphate or barium (thousands tons)

18,9

165,6

Polyethylene (thousands tons)

22,4

87,8

Propylene (thousands tons)

6,6

73,5

Isopropyl alcohol (thousands tons)

5,4

104,9

Paintwork material (tons)

732,3

113,6

Iodine (tons)

61,3

139

In January-March, the country produced over 5800 tons of hard polyethylene pipes, tubes and hoses which is 10.2 per cent more than the same period in 2012. Also the country produced 190 tons of porous polyurethane plates and strips which is 8.7 per cent less than in January-March 2012.

3. Electricity

In Jan.-March, Azerbaijan generated 5.74 billion kilowatt / hours of electricity, or 7.7 percent less than in Jan.-March 2012.

In 2012, the country generated 20.43 billion kilowatt / hours of electricity, or 6.8 percent more than in 2011.

A new electric power station "Janub" will be put into operation in Azerbaijan in the coming months. The start up work is being conducted at the main station units and the station can be put into operation soon. The station's capacity will hit 780 MW. It will work on the three types of fuel - gas, diesel fuel and fuel oil. From this point of view, "Janub" station is unique and has no analogue in Eastern Europe and the CIS countries. Commissioning of the new power facility will enhance the energy security of the Absheron Peninsula and southern regions of the country and improve the efficiency of power transmission and distribution systems.

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