Review of oil and gas operations in Azerbaijan (January-March 2015)

1. FEC

а) Oil and Gas Production

The production volume of oil and gas condensate in Azerbaijan in Jan.-March 2015 totaled 10.67 million metric tons, or 1.4 percent more than in the same period of 2014, Azerbaijani State Statistical Committee's report as of January-March 2015.

The production volume of oil and condensate in Azerbaijan totaled 41.9 million metric tons in 2014, compared to 43.1 million metric tons in 2013.

The major part of oil and gas production accounts for the Azeri-Chirag-Guneshli oil and gas fields' block and Shah Deniz gas condensate field that are developed jointly with foreign partners.

The production of the commercial gas in the country stood at 5.16 billion cubic meters in Jan.-March, according to the report on Q1 of 2015.

The production of commercial gas in the country totaled 18.7 billion cubic meters in 2014, compared to 17.9 billion cubic meters in 2013.

The State Oil Company of Azerbaijan (SOCAR) produced 2.07 million metric tons of oil from the country's onshore and offshore fields in Jan.-March, 2015.

Thus, the company produced 1.8 percent less oil compared to Jan.-March 2014 (2.11 million metric tons).

SOCAR produced 1.67 billion cubic meters of gas in January-March 2015 or by 16.4 percent (nearly 2 billion cubic meters) less than in the same period of 2014, SOCAR said.

All the work on drilling the SDD-03 well has been completed as part of the pre-drilling within the Stage 2 of development of Azerbaijan's Shah Deniz gas and condensate field.

Great Britain's BP is the operator for development of Shah Deniz field.

"The well with target depth of nearly 6,300 meters, was drilled with the 'Heydar Aliyev' drilling rig," said the source.

Drilling contractor SOCAR AQS continued drilling operations on the gas offshore field Bulla Deniz.

The daily debit of four wells on the platform No.6 will reach 2 million cubic meters of gas and 600 metric tons of condensate.

SOCAR started drilling the third well on the gas field Umid in the Caspian Sea.

"The design depth of the well is 1,500 meters."

Daily debit of two wells in the Umid field ranges within 1.1-1.5 million cubic meters of gas.

A new well (B-29) has been put into operation at Azeri-Chirag-Guneshli block of oil and gas fields in the Azerbaijani sector of the Caspian Sea.

The depth of the well nears 4,000 meters, according to the source. "The drilling was carried out on the Central Azeri platform and the whole necessary work was carried out by the KCA Deutag service company."

The source added that the drilling of the new well (B31) has already started at the Central Azeri field.

b) Processing

The volume of diesel fuel production in Azerbaijan in Jan.-March 2015 stood at 796,400 metric tons, or 25.9 percent more than in the same period of 2014, Azerbaijani State Statistical Committee said in its report.

Currently, the State Oil Company of Azerbaijan is carrying out the work on the modernization of the refining facilities as the fuel consumption has increased in the country.

SOCAR is the sole producer of petroleum products in Azerbaijan.

In total, 1.34 million metric tons of petroleum products were produced in Azerbaijan in Jan.-March 2015, compared to nearly 1.2 million metric tons in the same period of 2014, according to the report on Jan.-March 2015.

The table below shows the production volume of petroleum products in Azerbaijan:

The State Oil Company of Azerbaijan Republic (SOCAR), as a result of the bidding process, awarded the US- based company Fluor Limited a contract to provide project management contractor services for its new oil-gas processing and petrochemical complex (OGPC) in Azerbaijan on March 30.

"As the project management contractor, Fluor will support SOCAR's selection and management of future contractors that will perform detailed engineering, procurement, construction, commissioning and start-up of the gas processing plant as well as front-end engineering design, detailed engineering, procurement, construction, commissioning and start-up of the petrochemical plants including associated offsite facilities," the message said.

2. Chemical complex

Azerbaijan produced 25,500 metric tons of polyethylene in January-March 2015, which is 10 percent more than in the same period of 2014, the Azerbaijani State Statistics Committee said in its report as of January-March 2015.

The country produced 51.3 metric tons of iodine in January-March 2015, or 19 percent more than in the same period of 2014.

Around 1,250 metric tons of isopropyl alcohol were produced in the country in January-February, which is 29.6 percent more than in the same period of 2014, the report said.

Some 13,300 metric tons of barium sulfate were produced in Azerbaijan during the reporting period, which is 49.3 percent more than last year, and 25,500 metric tons of ethylene, which is 10.1 percent more than in January-March 2014.

However, Azerbaijan saw decrease in the production of other major types of chemical products in January-March 2015.

The table below shows the production volume of major types of chemical products:

The country produced 6,270 metric tons of solid polyethylene pipes, tubes and hoses, which is 72.6 percent more than in the same period of 2014.

3. Electricity

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The volume of electricity generation in Azerbaijan was 6.41 billion kilowatt hours in January-March 2015, which is 1.8 percent more than in the same period of 2014, the country's State Statistical Committee said in its report.

Marketable electricity accounted for 6.12 billion kilowatt hours of the total volume of electricity produced during the reporting period, which is 2 percent more than in the same period of 2014.

Thermal power plants accounted for 5.88 billion kilowatt hours of the total volume of marketable electricity generated in January-March, which is 2 percent more than in the same period of 2014.

Azerbaijan's hydro power plants generated 233.9 million kilowatt hours of electricity during the reporting period, which is 1.3 percent more than in the same period of 2014.

Moreover, wind power generation facilities generated 2.2 million kilowatt hours of electricity in January-March 2015.

The generation capacity of Azerbaijan's power supply system has increased by 30 percent over the last five years. Currently, its capacity is 7,105 megawatt. This generates around 24 billion kilowatt hours of electricity and export 2.1 billion kilowatt hours of electricity annually.

In 2014, Azerbaijan produced 23.11 billion kilowatt / hours of electricity, which is 6.7 percent more than in 2013.

Azerenergy JSC is the main producer of electricity in Azerbaijan. It has over 200 substations with a capacity of 500, 330, 220 and 110 kilovolt amperes, as well as ten hydro power plants and 14 thermal power plants.

Today, Azerbaijan is implementing the flow of electricity with Georgia, Iran and Russia.

Azerbaijan has started the work on developing the water area of the Caspian Sea in order to build wind farms there, Jamil Melikov, the deputy head of the State Agency on Alternative and Renewable Energy Sources said.

Melikov added that the offshore zone of the Caspian Sea has great potential in terms of energy capacity.

"There is a large space in our disposal where we can built wind farms," said Melikov.