а) Oil and Gas Production
The stabilization of oil production volumes after a sharp downturn in 2012 can be considered the main event of 2013. The matter rests in the fields developed jointly with foreign partners and those developed by SOCAR. As of the year, there is the slight growth in both cases compared to 2012. First of all, the expectations were associated with overcoming the production recession at Azeri-Chirag-Guneshli block of oil and gas fields. So, around 32.7 million tons of oil were extracted at Azeri-Chirag-Guneshli block in 2013 compared to projected 30.6 million tons.
As for gas, making a final investment decision for the Phase 2 development of the Shah Deniz largest field in the Azerbaijani sector of the Caspian Sea is a significant event in 2013. This actually means the beginning of the physical implementation of the project. Moreover, a decision was made to increase the annual production volume as part of Phase 1 from 9 to 10.4 billion cubic meters. According to the document signed in Baku on December 17, a contract on Shah Deniz development is extended until 2048 and SOCAR's equity in the project is increased from 10 percent to 16.7 percent.
Other events of the year:
- Volumes of recoverable oil reserves at the Azeri-Chirag-Guneshli oil and gas fields' block in the Azerbaijani sector of the Caspian Sea have increased by 76 percent. "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 in Baku. Some 151 million tons accounts for profit oil.
- The partners developing the block of offshore fields Azeri-Chirag-Guneshli in Azerbaijan received a preliminary contract for the development of deep lying gas. The agreement on this project will be concluded on the basis of a Risk Service Agreement. Such a contract will increase the volume of SOCAR's energy reserves. The deep lying gas reserves at the Azeri-Chirag-Guneshli are estimated at 300 billion cubic meters.
The new wells were drilled throughout the year and the reserves were produced from SOCAR's oil and gas fields, namely Goshadash, Bulla Deniz, shallow part of Guneshli, Umid, Oil Rocks, Alat-Deniz, Darwin Bank and others. SOCAR conducted drilling operations (excluding joint ventures and operating companies) to the amount of 142,656 meters in 2013 compared to 136,441 meters in 2012. Some 135,665 meters of the total volume of drilling operations fell to the production drilling, while 6,991 meters - exploration drilling.
SOCAR and Norwegian Statoil signed a memorandum of understanding on prospective structures Zafar and Mashal in the Azerbaijani sector of the Caspian Sea. The memorandum envisages holding the negotiations, coordination of the main commercial principles and conditions of the contract for the development and conclusion of the contract a year after its signing.
The jacket for the West Chirag platform built as part of the Chirag Oil Project (COP) sailed away. The West Chirag jacket is the heaviest jacket ever built in the Caspian. The jacket has a total weight of 18,200 tons (which includes 1500 tons of floatation tanks) and is about 185 metres high. It was installed at a water depth of about 170 metres.
Caspian Drilling Company (92.44 percent is owned by SOCAR) and Singaporean Keppel signed an agreement to build a new rig of the latest generation for holding the operations on the Caspian Sea.
Within the construction of the new platform of Chirag oil project (increase of oil production in block of Azeri-Chirag-Guneshli fields) topsides were installed onto its jacket. With its completed weight of 19,500 tons the West Chirag topsides is the heaviest structure ever installed in the Caspian Sea.
The consortium for the development of Azerbaijani gas condensate field Shah Deniz signed the contracts with buyers of Azerbaijani gas in Europe. The signed long-term contracts for the sale of gas cover 25 years. The contracts for the purchase of gas from the second stage of developing Shah Deniz field were signed with Shell, Bulgar gas, DEPA, Gas Natural Fenosa, EON, Gaz de France, Hera, Enel, Axpo.
Two major contracts were signed with Tekfen-Azfen and AMEC-Tekfen-Azfen (ATA) consortiums were signed to hold the construction work as part of the second phase of developing Shah Deniz gas condensate field.
In particular, it is planned to construct gas and condensate processing facilities at the Sangachal terminal, a pipeline stretching onshore to the terminal of facilities for the transit of gas, condensate and mono-ethylene glycol, as well as to hold the reconstruction operations at existing Sangachal terminal.
It is planned to construct the upper modules of the production platform and a technological platform, including a housing unit within five years as part of the second contract.
Azerbaijan produced 43.1 million tons of oil and gas condensate in 2013 compared to 42.98 million tons in 2012, the Azerbaijani State Statistics Committee said.
According to the State Statistics Committee, the bulk of oil production in 2013 fell to the Azeri-Chirag-Guneshli oil and gas field block and Shah Deniz gas condensate field being developed jointly with foreign partners.
Some 33 million tons of oil were extracted at Azeri-Chirag-Guneshli in 2013. The production volume from SOCAR's own fields hit more than 8 million tons. The remaining volume fell to the condensate from Shah Deniz gas condensate field.
Gas production amounted to 17.9 billion cubic meters of tank gas in 2013 compared to 17.24 billion cubic meters in 2012.
Some 30.78 billion cubic meters were extracted in the country in 2013 (according to SOCAR) compared to 29 billion cubic meters in 2012.
Over 4.82 billion manat was invested in Azerbaijan's oil sector in 2013 or by 24.2 percent more than in 2012 (the State Statistics Committee's data).
Some 1.41 million tons of petrol were produced in Azerbaijan in 2013, which is 8.5 percent more compared to 2012, the State Statistics Committee reported.
According to the State Statistics Committee, Azerbaijan produced about 1.3 million tons of petrol in 2012 or 0.1 percent more than in 2011.
Azerbaijan produced 5.09 million tons of the main petroleum products in 2013.
Summary table of production of oil products in Azerbaijan:
Production of petroleum products
in 2013 (in thousands)
Compared to 2012 (%)
The fact that petrol consumption level is equal to the volume of its production for the first time in Azerbaijan and this was a trend of 2013, SOCAR head Rovnag Abdullayev said in late December.
According to the official statistics, petrol production increased from 720,000 tons in 2003 to 1.4 million tons in Azerbaijan in 2013.
The petrol production growth is associated with an increase in its demand on the domestic market. This is associated with an increase in the number of vehicles in the country, the number of which increased by 2.4 times - from 511,500 in 2003 to 1.245 million in 2013.
It is planned to increase the capacity of a catalytic cracking unit at the Heydar Aliyev Baku Oil Refinery to ensure the growing volume of petrol consumption in 2014. The reconstruction and expansion of existing units will meet the country's petrol needs until a new oil and gas processing complex is commissioned.
Providing the domestic market with enough oil products requires an increase in the volumes of processed oil.
SOCAR Vice-President for Refining, David Mammadov said that in 2014, SOCAR will direct all of the oil produced at its fields for processing.
SOCAR processed 6.5 million tons of oil and 3.8 billion cubic meters of gas in 2013. The processing depth was 92 percent.
Around 5.2 million tons of oil products were delivered to the Azerbaijani domestic market in 2013 or 9.1 percent more than in 2012, the State Statistics Committee said. According to the State Statistics Committee, around 4.8 million tons of petroleum products were delivered to the Azerbaijani domestic market in 2012 or 8.8 percent more than in 2011.
According to the report, in particular, supply of petrol (a 7.7 percent increase), diesel fuel (a 9.4 percent growth), jet fuel (a 12.8 percent increase), oil bitumen (a 12.9 percent increase), liquefied gas (a 35.8 percent increase) and other petroleum products to the domestic market increased in 2013.
Around 6.8 million tons of Azerbaijani oil products were delivered to consumers (including exports) in 2013 or 3.9 percent more than in 2012. Around 77.5 percent of the total volume of petroleum products delivered to customers was sold on the domestic market, while the remaining 22.5 percent went to export.
2. Chemical complex
Azerbaijan produced 76,000 tons of polyethylene in 2013, which is by 13.9 percent more than in 2012, the Azerbaijani State Statistics Committee said. According to the State Statistics Committee, an increase in production was observed in most categories of main chemical products in the country in 2013.
Production of basic chemical products:
Compared to 2012 (%)
Barium Sulphate (thousands tons)
Polyethylene (thousands tons)
Propylene (thousands tons)
Isopropyl alcohol (thousands tons)
Paintwork material (tons)
The country produced 27,330 tons of hard polyethylene pipes, tubes and hoses in 2013, which is 0.2 percent more than the same period in 2012. The country produced 643 tons of porous polyurethane plates and strips, which is 2.6 percent more than in 2012.
The foundation laying ceremony of the Sumgait Chemical Industrial Park held in October was a significant event in the chemical area in 2013.
The territory of the park with a total area of 168 hectares will be divided into two parts, namely, the administrative-social and industrial zones. Thus, 16-story and 20-story office buildings, a professional and educational center, seven workshops, a complex for conferences and exhibitions and a hostel, a laboratory and research center, indoor and outdoor sports facilities, a kindergarten and a number of other social facilities will be built in administrative-social zone. There will be around 35-40 companies at 43 areas of the industrial zone. Around 7,000 new permanent jobs are expected to be created. The industrial zone will be divided into subsections, namely, polymer chemistry, construction chemistry, automotive industry, agricultural chemistry, household chemistry and medicinal chemistry. Residents of the Sumgait Chemical Industrial Park are exempt from income tax, land and property taxes to increase the investment attractiveness of the Sumgait Chemical Industrial Park for a seven year period.
Around 20.63 billion kilowatt/hour electricity was generated in Azerbaijan in 2013, which is by 0.6 percent more than in the same period of 2012, the Azerbaijani State Statistics Committee said.
According to the State Committee, some 19.26 billion kilowatt/hours of the total volume of generated electricity fell to the share of thermo power plants which is by 2.7 percent more than in 2012.
The hydro power plants of Azerbaijan generated around 1.37 billion kilowatt/hour of electricity which is by 21.7 percent less than in 2012.
The planned electricity flow with Russia, Iran, Turkey and Georgia was continued during this period.
Azerenergy company generates and distributes electricity in Azerbaijan.
There are more than 200 substations with a capacity of 500, 330, 220 and 110 kilovolt amperes, as well as 9 hydropower plants and 13 thermal power plants on Azerenergy's balance sheet.
At present, the installed capacity of the country's power system is about 6,500 megawatts, of which about 5,500-5,600 MW were used. In this case, the country's demand for electricity is at the level of 4,200-4,400 MW.
- the operations were conducted as part of big energy transmission projects in Azerbaijan. In particular, an additional 220-kilovolt Mingachevir-Absheron power transmission line with a length of over 220 kilometers was under construction.
- a 220-kilovolt power transmission line Shimal - Hovsan with a length of 25.5 kilometers, as well as Shimal-Zabrat-Sumgait with a total length of 68.6 kilometers were under construction.
-Janub large power station was opened. The capacity of the station is 780 MW. It works on three types of fuel, namely, gas, diesel fuel and black oil. The power station may generate 6,000 billion kilowatt hours of electricity per year.
-'Fitch Ratings' international rating agency affirmed Azerenergy JSC's Long-term foreign currency Issuer Default Rating (IDR) at 'BBB-' with a Stable Outlook and short-term foreign currency IDR at 'F3'.
-Azerbaijan exported over 595.67 million kilowatt/hours of electricity in 2013 on customs declaration compared to 482.7 million kilowatt/hours in 2012, a report of Azerbaijan's State Customs Committee said.
-The work as part of the Azerbaijan-Georgia-Turkey energy bridge in Azerbaijan and Georgia has been completed. The energy bridge is a part of the "Black Sea Transmission Network", which will allow exporting electricity from Azerbaijan to Georgia and Turkey and further to Europe. The electricity is planned to be exported in 2014 as part of the project.
-The capacity of electric system of Azerbaijan exceeded 7,000 megawatt in 2013, Azerbaijani Energy Minister Natiq Aliyev said. "The generation capacity of the country's electric system increased by 830 megawatts in 2013, surpassing 7,000 megawatts," Aliyev added.