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Review of oil and gas operations in Azerbaijan (January-March 2016)

Analysis Materials 13 May 2016 14:27

1. FEC

а) Oil and Gas Production

Azerbaijan produced 10.52 million tons of oil and gas condensate in the first quarter of 2016, or 1.5 percent less than in the same period in 2015, said the report from the country's State Statistical Committee as of the first three months of 2016.

Azerbaijan produced 41.69 million tons of oil and gas condensate in 2015, as compared to 41.9 million tons in 2014.

The Azeri-Chirag-Guneshli block of oil and gas fields accounts for the major part of oil production in Azerbaijan.

The commercial gas production in the country stood at 4.84 billion cubic meters in January-March of 2016, or 7.9 percent less than in the first quarter of 2015, according to the Statistical Committee.

This is while the commercial gas production in Azerbaijan totaled 19.72 billion cubic meters in 2015, as compared to 18.7 billion cubic meters in 2014.

The volume of investments made in Azerbaijan's oil and gas sector in January-March 2016 stood at 2.25 billion manat, or 47 percent more than in the same period in 2015, said a report from the country's State Statistical Committee.

The State Oil Company of Azerbaijan (SOCAR) produced 1.9 million tons of oil at the country's offshore and onshore fields in January-March 2016 versus 2.1 million tons of oil produced in the same period of 2015.

SOCAR produces oil on offshore and onshore fields of Azerbaijan at its own expense.

SOCAR extracted 1.59 billion cubic meters of gas from the country's offshore and onshore fields in Q1 2016 using its own funds, versus 1.67 billion cubic meters extracted in the same period 2015.

SOCAR carried out drilling operations in the volume of 26,410 meters in Jan.-March 2016 versus 20,750 meters during the same period of 2015, SOCAR's message said.

All volume of drilling operations in Jan.-Feb. accounted for production drilling.

Ten new wells were commissioned during the reporting period.

SOCAR constructed and put into operation a deep-water platform No 7 at Gunashli field in the Caspian Sea. This is the deepest platform. The platform was designed and constructed by SOCAR. The platform is designed for drilling 20 wells, six of which are gas wells, 14 - oil wells. According to SOCAR head, approximately 100 tons of oil and 15,000 cubic meters of gas are planned to be produced from each oil well daily, while 150,000 cubic meters of gas and 15 tons of condensate - from gas wells.

SOCAR and Zenith Aran Oil Company, a subsidiary of Canada's Zenith Energy, signed an agreement on production sharing, restoration, development and exploration at the block that includes Muradkhanli, Jafarli and Zardab oil fields.

Muradkhanli, Jafarli and Zardab fields cover an area of 642.4 square kilometers. Currently, the average daily oil production at these fields is 350 barrels.

b) Processing

Azerbaijan produced 1.45 million tons of oil products in January-March 2016, compared to 1.34 million tons in the same period of 2015, said the report. Currently, SOCAR is modernizing its processing facilities, as the fuel consumption has increased in the country.

During the reporting period, Azerbaijan produced 281,100 tons of gasoline, or 6.4 percent less than in January-March 2015.

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

Oil products

January-March 2016 (1,000 tons)

Compared to January-March 2015 (%)

Gasoline

281,1

93,6

Naphtha

42,8

89,7

Kerosene

172

105,3

Diesel fuel

572

71,8

Fuel oil

339,7

1698,5 times

Lubricants

1

35,7

Oil bitumen

22

67,5

Oil coke

21,4

33

Amec Foster Wheeler has been awarded a front-end engineering design (FEED) contract to modernize the Heydar Aliyev Oil Refinery in Baku, Azerbaijan. SOCAR will use a suite of Honeywell UOP technologies to modernize its oil refinery in Baku, to produce high-quality gasoline that meets stricter emission standards. The effort will help Azerbaijan meet growing domestic demand for transportation fuels that meet international emission standards equivalent to Euro V fuel requirements.

2. Chemical complex

Azerbaijan produced 27,500 tons of polyethylene in 1Q2016, which is by 7.9 percent more than the same period of 2015, said the report.

Azerbaijan produced 13,800 tons of propylene in January-March 2016, which is by 2.9 percent less than the same period of 2015.

The country produced 16,000 tons of barium sulfate during the reporting period, which is by 20.7 percent more than the January-March of 2015, according to the report.

During the 1Q2016, Azerbaijan produced 4,170 tons of isopropyl alcohol, which is by 3.3 times more than the same period of 2015.

The report also said that an increase was observed in many spheres of chemical products' output in Azerbaijan in January-March 2016.

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

Products

Jan.-March 2016

Compared to Jan.-March 2015

(%)

Barium sulfate (1,000 tons)

16

118,9

Polyethylene (1,000 tons)

27,5

107,9

Propylene (1,000 tons)

13,8

97,1

Isopropyl alcohol (1,000 tons)

4,17

by 3.3 times more

Paint products (tons)

1,16

by 2.1 times more

Iodine (tons)

44,5

86,7

Azerbaijan also produced 1,540 tons of rigid polyethylene tubes, pipes and hoses in March 2016, which is 48.1 percent less than the same period of 2015.

SOCAR's AzeriKimya Production Union has signed a contract with Technip Italy.

The contract envisages conducting detailed designing and providing services to support supplies as part of the project for reconstruction of the ethylene-polyethylene plant in Sumgait.

This will make it possible to increase the production facilities at Azerikimya, ensure the supply of raw materials to polyethylene and polypropylene production installations and to meet the demand in the country.

It will also increase the country's export potential, enhance the security of the technological process and the quality of raw materials and finished products.

3. Electricity

­Azerbaijan's power plants have generated 5.98 billion kilowatt hours of electricity in January-March 2016, or 6.8 percent less than in the same period in 2015, said a report.

During the reporting period, commercial electricity accounted for 5.71 billion kilowatt hours of the total volume of electricity production, or 6.7 percent less than in January-March 2015.

Thermal power plants accounted for 5.33 billion kilowatt hours of the total volume of commercial electricity production in the first quarter of 2016, or 9.4 percent less than in the same period in 2015.

During the reporting period, Azerbaijan's hydro power plants have generated 376.7 million kilowatt hours of commercial electricity, or 60.4 percent more than in January-March 2015.

This is while the wind farms and solar power plants in the country have produced 3.4 million and 1.1 million kilowatt hours of electricity, respectively, in January-March 2016.

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 10 hydro power plants and 14 thermal power plants.

At present, the generation capacity of Azerbaijan's power supply system hits 7,200 megawatts. This allows generating around 24 billion kilowatt hours of electricity annually.

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