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

1. FEC

а) Oil and Gas Production

From January to October 2015, some 35.03 million tons of oil and gas condensate were extracted in Azerbaijan, which is two percent less than in the same period of last year, according to a report issued by Azerbaijan's State Statistics Committee.

In 2014, Azerbaijan produced 41.9 million tons of oil and gas condensate, compared to 43.1 million tons in 2013.

Azerbaijan's main oil production accounts for the 'Azeri-Chirag-Guneshli' block of oil and gas fields and the 'Shah Deniz' gas condensate field, which are developed jointly with foreign partners.

Extraction of marketable gas in Azerbaijan, according to the Statistics Committee, stood at 16.39 billion cubic meters in January-October, or 6.2 percent more than in the same period of 2014.

The total volume of the extracted gas amounted to 24.07 billion cubic meters, the State Oil Company of Azerbaijan (SOCAR).

The marketable gas extraction in the country in 2014 amounted to 18.7 billion cubic meters, compared to 17.9 billion cubic meters in 2013.

SOCAR produced 5.76 b c m of gas from Jan.-Oct. 2015 compared to 6.1 billion in the same period in 2014.

SOCAR produced 6.91 million tons of oil from the country's offshore and onshore fields in Jan.-Oct. 2015, compared to 7.01 million tons in the same period in 2014, said the company's website.

The drilling work carried out by SOCAR (excluding joint enterprises and operating companies) reached 92,323 meters in Jan.-Oct. 2015 or 14.1 percent less than in the same period of 2014 (107,451 meters).

Some 91,323 meters of the total volume of drilling work carried out by SOCAR during the reporting period accounted for development drilling, while the remaining 1,000 meters - exploration drilling.

SOCAR continued drilling both onshore and offshore fields in Azerbaijan to implement a program to stabilize and increase oil production in October.

SOCAR has commissioned 59 new wells since early 2015, the statement said.

Some 5.91 billion manat was invested in the oil and gas sector of Azerbaijan in January-October, which is 20.4 percent more than in the same period of last year.

SOCAR will soon determine the place to drill an exploration well on an onshore area with Mesozoic sediments in Azerbaijan, Khoshbakht Yusifzade, the first vice-president of SOCAR, said.

He said that most of the fields recently developed by SOCAR are mostly gas-condensate.

"We are now working on the deep-sea areas," he said. "It is difficult to discover oil at a depth of 6,000-7,000 meters. These are mainly gas fields. For this reason, we plan to resume activity at the onshore fields. More than 1 billion metric tons of oil has been produced from them up till now or 40 percent of total geological reserves. Using the new technologies will increase the production here by 10 percent."

He said that SOCAR is negotiating about the joint development of these deposits with a number of foreign companies.

b) Processing

Some 1.02 million metric tons of gasoline were produced in Azerbaijan in January-October 2015, or 0.3 percent less than in the same period of 2014, the Azerbaijani State Statistics Committee's report as of ten months of 2015 says.

Currently, SOCAR is modernizing its processing facilities, as the fuel consumption has increased in the country.

Some 4.58 million metric tons of oil products were produced in Azerbaijan in January-October 2015 compared to over 4.6 million metric tons in 2014.

Below is the summary table of oil products' output in Azerbaijan:

Oil products

Jan.-Oct. 2015 (thousand tons)

Compared to Jan.-Oct. 2014 (%)

Gasoline

1020,5

99,7

Naphtha

162,5

95

Kerosene

573,5

97,6

Diesel fuel

2362,8

99,1

Fuel oil

302,9

161,3

Lubricants

19,5

42,8

Oil bitumen

142

67,7

SOCAR and Austrian Pörner Group signed a contract for the construction of a bitumen unit as part of the modernization of the Heydar Aliyev Baku Oil Refinery in October.

SOCAR and the French company Axens signed a contract for the construction of the diesel fuel and gasoline hydro-treating units as part of the modernization of the Heydar Aliyev Baku Oil Refinery.

2. Chemical complex

Azerbaijan produced 81,900 metric tons of polyethylene in January-October 2015, which is 2.4 percent more than in the same period of 2014, the Azerbaijani State Statistics Committee said in its report as of January-October 2015.

The country produced 45,800 metric tons of propylene in January-October 2015, or 0.7 percent more than in the same period of 2014.

Some 50,200 metric tons of barium sulfate were produced in Azerbaijan during the reporting period, which is 16.6 percent more than in the same period of 2014.

Around 9,230 metric tons of isopropyl alcohol were produced in the country in January-October, which is 27.2 percent more than in the same period of 2014, the report said.

However, Azerbaijan saw an increase in the production of other major types of chemical products in January-October 2015.

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

Products

Jan.-Oct. 2015

Compared to Jan.-Oct. 2014

(%)

Barium sulfate (1,000 tons)

50,2

116,6

Polyethylene (1,000 tons)

81,9

102,4

Propylene (1,000 tons)

45,8

100,7

Isopropyl alcohol (1,000 tons)

9,23

127,2

Paint products (tons)

3,86

120,1

Iodine (tons)

210,8

95,5

The country produced 10,500 tons of solid polyethylene pipes, tubes and hoses, which is 27.5 percent less than in the same period of 2014.

President of the Republic of Azerbaijan Ilham Aliyev has attended the groundbreaking ceremony of the High Density Polyethylene Plant, which will be built as part of the "SOCAR Polymer" project.

SOCAR Polymer was created in 2013. The plants of the company are being built on the site of the Sumgayit Chemical Industrial Park under the order of President Ilham Aliyev.

It was noted that the annual capacity of the two units of the company will be 180,000 tons of polypropylene and 120,000 tons of high density polyethylene. These units will be commissioned in 2018.

3. Electricity

­

Azerbaijan produced 18.9 billion kilowatt hours of electricity in Jan.-Oct. 2015, or 0.6 percent more than in the same period in 2014, said a report issued by the country's State Statistical Committee.

Of the total volume of electricity production, 18 billion kilowatt hours accounted for commercial electricity, or 0.6 percent more than in the same period in 2014.

This is while of the total volume of commercial electricity produced in Jan.-Oct. 2015, around 16.67 billion kilowatt hours (88.1 percent) accounted for the thermal power plants, or 0.8 percent less than in the same period of 2014.

The hydro power plants in the country have generated 1.33 billion kilowatt hours of commercial electricity in Jan.-Oct. 2015, or 19.8 percent more than in the same period in 2014.

The wind power generating facilities have produced 4.9 million kilowatt hours of electricity in Jan.-Oct. 2015, while the solar energy facilities have generated 3.5 million kilowatt hours of electricity.

Azerbaijan produced 23.11 billion kilowatt hours of electricity in 2014, or 6.7 percent more than in 2013.

Today, Azerbaijan is transferring the flow of electricity to Georgia, Iran and Russia.

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 allows to generate around 24 billion kilowatt hours of electricity and export 2.1 billion kilowatt hours of electricity annually.

The construction project of a wind farm in the Caspian Sea has been submitted to the Azerbaijani government.

Earlier, the head of the State Agency Akim Badalov said that the wind farm will be built on the platforms in the Caspian Sea between the islands of Pirallahi and Chilov and will become the first such project in the world. The capacity of the power plant will be 200 megawatts.

The project is estimated at 450-500 million manats. Its payback period is about 10 years. The funds will be attracted through export credits. "Investors from Germany, China and the Arab countries have already expressed interest in the project," said Badalov.

The total potential of alternative and renewable energy sources in Azerbaijan exceeds 12,000 megawatts.

Most of the country's potential in this area accounts for solar energy, and this potential is estimated at 5,000 megawatts.

Some 4,500 megawatts account for wind power, 1,500 megawatts for biomass, 800 megawatts for geothermal energy, while the remaining 350 megawatts account for the potential of small hydro power plants.

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