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

1. FEC

а) Oil and Gas Production

Some 34.72 million tons of oil and gas condensate were produced in Azerbaijan in January-October 2016, which is 0.8 percent less than in the same period of 2015, the Azerbaijani State Statistics Committee said in a 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 main oil output in Azerbaijan currently comes from the Azeri-Chirag-Gunashli field.

The tank gas production in Azerbaijan stood at 15.49 billion cubic meters in January-October 2016, or five percent less than in the same period of 2015.

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

Azerbaijan’s state oil company SOCAR produced 5.21 billion cubic meters of gas from the country’s offshore and onshore fields using its own funds in January-October 2016, as compared to 5.76 billion cubic meters in the same period of 2015.

In addition to its own production, SOCAR also gets gas from the Shah Deniz and Azeri-Chirag-Gunashli (associated gas) fields by developing these fields in cooperation with foreign partners.

The total volume of gas produced from those fields and independently developed ones was 24.64 billion cubic meters in January-October 2016, as compared to 24.07 billion cubic meters in the same period of 2015.

SOCAR produced 6.32 million tons of oil from the country’s onshore and offshore fields in January-October 2016 versus 6.91 million tons in the same period of 2015.

SOCAR drilled 93,660 meters in January-October 2016 versus 92,320 meters drilled in the same period of 2015.

According to the message, some 90,987 meters out of the total drilling operations accounted for production drilling and 2,670 meters accounted for exploration drilling.

SOCAR commissioned 52 new wells in January-October 2016.

About 7.91 billion manat were invested in Azerbaijan’s oil and gas sector in January-October 2016 compared to 5.91 billion manat in the same period of 2015, the country’s State Statistics Committee said in a report as of January-October 2016.

SOCAR is working to stabilize oil production at old fields, Rahman Gurbanov, the company’s vice president for oil and gas transportation and gas facilities, said.

He said the main goal of SOCAR is not to increase oil production, but to rehabilitate the old fields.

“Falling oil prices in global markets don’t give us the opportunity to increase investment for this [increasing oil production],” Gurbanov said. “SOCAR has a program aimed at the rehabilitation of the old fields, stabilization of oil production and increasing oil recovery factor at those fields, and the work is underway in accordance with this program.”

- A decrease in commercial gas volumes compared to the total production is related to an increase in gas injection into reservoirs on the Azeri-Chirag-Guneshli (ACG) block of fields and the underground gas storage facilities in the country, Rahman Gurbanov, the company’s vice president for oil and gas transportation and gas facilities, said. "We pump gas into the reservoirs on the ACG to maintain pressure there to stabilize oil production, as well as pump it into our underground gas storage facilities as part of preparation for winter,” he said. The share of commercial gas in the total production decreased."

b) Processing

Azerbaijan produced 4.35 million tons of oil products in January-October 2016 compared to 4.58 million tons in the same period of 2015, said the report of the Azerbaijani State Statistics Committee.

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

Azerbaijan produced 944,500 tons of gasoline in January-October 2016 or 7.4 percent less than in January-October 2015.

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

2. Chemical complex

Azerbaijan produced 41,800 tons of propylene in January-October 2016, which is 8.7 percent less than in the same period of 2015, the Azerbaijani State Statistics Committee said in a report.

According to the report, the country produced 77,300 tons of polyethylene in January-October 2016, or 5.5 percent less than in the same period of 2015.

Some 51,100 tons of barium sulfate were produced in Azerbaijan during the period, which is 1.8 percent more than in the same period of 2015.

According to the report, 7,530 tons of isopropyl alcohol were produced in the country in January-October, which is 18.4 percent less than in the same period of 2015.

Azerbaijan saw a decrease in the production of major types of chemicals in January-October 2016.

Below are the figures for output of major chemicals in Azerbaijan:

3. Electricity

­Azerbaijani power plants generated 18.71 billion kilowatt hours of electricity in January-October 2016, which is by 1 percent less than in the same period of 2015, the country’s State Statistics Committee said in a message.

According to the message, some 17.88 billion kilowatt hours of the total electricity generation accounted for commercial electricity in January-October 2016, which is 0.7 percent less than in January-October 2015.

Thermal power plants generated 16.14 billion kilowatt hours of the total commercial electricity generation in January-October 2016, or 3.1 percent less than in the same period of 2015.

Azerbaijan’s hydro-power plants generated 1.67 billion kilowatt hours of commercial electricity in January-October 2016, which is 25.1 percent more than in January-October 2015.

Wind farms produced 13.2 million kilowatt hours of electricity, while solar power plants - 56 million kilowatt hours of electricity in the reporting period.

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 is 8,100 megawatts.

Construction of the second combined cycle power unit at the Shimal power plant in Baku has already ended.

It will be commissioned by end of 2016.

The capacity of the second combined cycle unit at the Shimal power plant will be 409 megawatts.

The construction of the second unit is done under a contract with the Japanese company Toyo Engineering.