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

1. FEC

а) Oil and Gas Production

Azerbaijan produced 21.06 million tons of oil and gas condensate in H1 2016, or 0.4 percent more than in the same period in 2015, the country’s State Statistical Committee said in its report.

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

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

The marketable gas production in Azerbaijan stood at 9.36 billion cubic meters in January-June 2016, or 8.8 percent less than in H1 2015.

This is while the country produced 19.72 billion cubic meters of marketable gas in 2015, as compared to 18.7 billion cubic meters in 2014.

- Azerbaijan’s state oil company SOCAR produced 3.78 million tons of oil from the country’s offshore and onshore fields in H1 2016, as compared to 4.14 million tons in January-June 2015.

SOCAR produced 3.16 billion cubic meters of gas in H1 2016 on its own, as compared to 3.37 billion cubic meters in January-June 2015.

- SOCAR drilled 53,280 meters in H1 2016, as compared to 53,440 meters in the same period in 2015. Production and exploratory drilling accounted for 52,063 meters and 1,217 meters of the total volume of drilling work in January-June 2016. SOCAR commissioned 26 new wells during the reporting period.

- About 4.45 billion Azerbaijani manats have been invested in Azerbaijan’s oil and gas sector in H1 2016, or 29.4 percent more than in the same period in 2015, the country’s State Statistical Committee said in its report.

- SOCAR plans to build nine infrastructural bases for drilling of 81 oil and gas wells in the Azerbaijani sector of the Caspian Sea in 2016-2017 as part of the company's development strategy, and that will give impetus to hydrocarbon production growth in the country, said SOCAR President Rovnag Abdullayev. SOCAR has already built platform No. 7 at the Guneshli field, as well as the platform No. 6 at the Bulla Deniz field, and drilling has already started there, said the company’s head.

The new gas platform at the Guneshli field will become the first one in the history of independent Azerbaijan, the design and construction of which was fully implemented by SOCAR, said Abdullayev. The platform is designed for drilling of 20 wells (six gas wells and 14 oil wells). It is planned to daily extract 100 tons of oil and 15,000 cubic meters of associated gas from each oil well, 150,000 cubic meters of gas and 15 tons of condensate from gas wells, according to estimates.

b) Processing

Azerbaijan produced 2.68 million tons of oil products in H1 2016, as compared to 3.06 million tons in the first six months of 2015, said the report issued by the country’s State Statistical Committee.

Currently, the State Oil Company of Azerbaijan (SOCAR) – the sole producer of oil products in the country - is modernizing its processing facilities, as the fuel consumption has increased in the country.

During the reporting period, Azerbaijan produced 572,400 tons of gasoline, or 1.4 percent more than in January-June 2015.

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

Oil products

Jan.-June 2016 (1,000 tons)

Compared to Jan.-June 2015 (%)










Diesel fuel



Fuel oil


8.5 times




Oil bitumen



Oil coke



- SOCAR intends to increase the depth of oil processing to 97 percent at Baku Oil Refinery after the completion of its modernization, said a source in the company. The source added that this figure will be 90 percent in 2016. “In 2015, the processing depth was 91.4 percent, and we expect it to reach 90 percent for 2016,” said the source. “It is related to modernization process underway at the plant, as well as the fact that SOCAR plans to slightly increase the production of fuel oil due to the growth of its consumption in the country which is observed due to the fact that it became more profitable for power plants to use fuel oil instead of gas.”

- SOCAR plans to increase the light oil products’ output in 2016, said a source in the company. The source said the light oil products are forecasted to account for 67.4 percent of the total oil products’ output in 2016. “In 2016, we plan to increase this figure to 67.4 percent, which is around 3.6-3.7 million tons.”

2. Chemical complex

Azerbaijan produced 52,300 tons of polyethylene in H1 2016, or 8.1 percent more than in the first six months of 2015, the State Statistical Committee said in its report.

The country produced 27,900 tons of propylene in January-June 2016, or 1.7 percent more than in the same period in 2015.

Some 31,800 tons of barium sulfate was produced in Azerbaijan during the reporting period, which is 11.8 percent more than in the same period of 2015.

Around 6,200 tons of isopropyl alcohol was produced in the country in January-June, which is 37.3 percent more than in the same period of 2015, the report said.

Azerbaijan saw an increase in the production of majority of main types of chemical products in the first six months of 2016.

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


Jan.-June 2016

Compared to Jan.-June 2015


Barium sulfate (1,000 tons)



Polyethylene (1,000 tons)



Propylene (1,000 tons)



Isopropyl alcohol (1,000 tons)



Paint products (tons)



Iodine (tons)



Argon (1,000 cubic meters)



Beauty aids (1,000 manats)



Ethylene (1,000 tons)



Detergents (tons)



- Azerbaijan is studying the possibility to build a plant for production of synthetic motor oils using the natural gas liquefaction technology at the Sumgait Chemical Industrial Park (SCIP), according to the 2016 catalogue of Azerbaijan’s investment projects published by the Azerbaijan Export and Investment Promotion Foundation (AZPROMO).

“Major car manufacturers recommend the use of synthetic motor oils,” says the catalogue. “Considering that there is no such production in Azerbaijan, import volumes are high and continue to rise.”

Synthetic motor oils can be produced using the gas-to-liquids (GTL) technology [natural gas liquefaction], according to the catalogue.

“Considering the large reserves of the Shah Deniz gas field, Azerbaijan has good opportunities to develop this technology,” says the catalogue. “Construction of the plant will be a driver of the chemical production’s development, and liquefied gas can be used as a raw material for production of other chemical products.”

The project’s cost is estimated at $350 million. The financing structure is yet to be determined.

- Aqrokimya Azerbaijan company received the status of the eighth resident of Sumgait Chemical Industrial Park. Director of Aqrokimya LLC Rashad Karimov said that the company will be engaged in pesticide production on the territory of the industrial park.

It will be the first pesticide production plant on Azerbaijan’s territory, said Karimov, adding that to date, pesticides have been imported by the country.

“We plan to produce around 9,000 tons of pesticides per year,” he said, adding that Turkish and German experience will be used in the production.

Karimov said that the plant’s construction and the start of the production will enable Azerbaijan not only to refuse from the import of pesticide, but also become its exporter.

- Ferrosilicon and ferrosilicon manganese will be produced at Azerbaijan's Sumgait Chemical Industrial Park (SCIP) starting from the second half of 2017, said the Azerbaijani Economy Ministry. Construction of a plant has already begun by the Baku Non-Ferrous Metals & Ferroalloys Company. The plant is planned to produce 20,000 tons of ferrosilicon and 36,000 tons of ferrosilicon manganese annually.

3. Electricity


The power plants in Azerbaijan have generated 10.95 billion kilowatt hours of electricity in H1 2016, or 6.3 percent less than in the same period in 2015, the country’s State Statistical Committee said in its report.

Marketable electricity accounted for 10.47 billion kilowatt hours of the total volume of electricity produced in Azerbaijan during the reporting period, or 6.1 percent less than in January-June 2015.

Thermal power plants accounted for 9.37 billion kilowatt hours of the total volume of marketable electricity produced in January-June 2016, or 8.4 percent less than in the same period in 2015.

Hydro power plants in Azerbaijan generated 1.07 billion kilowatt hours of marketable electricity, or 16.5 percent more than in January-June 2015.

The country’s wind power and solar power generation facilities produced 9.2 million kilowatt hours and 26.6 million kilowatt hours of electricity, respectively in H1 2016.

The main producer of electricity in Azerbaijan is Azerenergy JSC which owns over 200 substations with the capacity of 500, 330, 220 and 110 KVA, as well as 10 hydro power plants and 14 thermal power plants.

Currently, the generation capacity of Azerbaijan’s power supply system is around 7,200 megawatts. This allows the country to generate around 24 billion kilowatt hours of electricity per year and export 2.1 billion kilowatt hours of this volume annually.

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