Review of oil and gas operations in Azerbaijan (January-July 2017)

1. FEC

а) Oil and Gas Production

In January-July 2017, 22.5 million tons of oil and gas condensate were produced in Azerbaijan, which is 8.9 percent less than in the same period of 2016, according to the State Statistical Committee’s report.

In 2016, 41.03 million tons of oil and gas condensate were produced in Azerbaijan, which is 1.5 percent less than in 2015.

The main oil output in Azerbaijan accounts for the Azeri-Chirag-Gunashli (ACG) block of oil and gas fields.

Output of commercial gas in Azerbaijan stood at 10.87 billion cubic meters in January-July 2017, or 1.3 percent less than in January-July 2016, according to the State Statistical Committee.

Commercial gas output stood at 18.71 billion cubic meters in Azerbaijan in 2016, as compared to 19.72 billion cubic meters in 2015.

The contract for the development of the ACG field was signed in 1994. The proven oil reserves of the block near 1 billion tons.

Shareholders of the project are BP (operator, 35.78 percent), Chevron (11.28 percent), Inpex (10.96 percent), AzACG (11.65 percent), Statoil (8.55 percent), Exxon (8 percent), TPAO (6.75 percent), Itocu (4.3 percent) and ONGC (2.72 percent).

- Azerbaijani state oil company SOCAR has completed the work on reconstruction of platform #11 at the Gunashli field in the Caspian Sea.

The project envisages the drilling of four additional production wells at the field.

The aim of the project is the quality exploitation of new wells that will be drilled here, and ensuring stable production of oil and gas.

Each of the four wells is expected to give 80 tons of oil and10,000 cubic meters of gas per day.

- JSC Gazpromneft–Aero, the operator of aviation fuel business of Russia’s Gazprom Neft PJSC, and SOCAR Turkey Petrol Enerji Dagitim San Tic. A.S., which is one of the leaders on aviation fuel supplies in Turkey, have signed an agreement, the Russian company said in a message.

The agreement envisages refueling of partner airlines of SOCAR Turkey Petrol Enerji at Russian airports where the Gazpromneft-Aero operates, says the message.

- Greek, Bulgarian, Romanian and Hungarian gas transmission companies DESFA, Bulgartransgaz, Transgaz and FGSZ and ICGB AD consortium, the contractor for the Greece-Bulgarian Interconnector (IGB) pipeline project, signed a memorandum of understanding on the Vertical Gas Corridor project, DESFA said in a message.

"The full activation of the Vertical Corridor will give the entire region an opportunity to significantly benefit from diversified natural gas import that Greece has and which will soon be further increased, via an upgrade of the LNG Terminal in Revythousa and the Caspian Sea gas that will be transported by the TAP pipeline which is under construction," DESFA said.

DESFA President and CEO Sotirios Nikas noted that this memorandum serves the country's energy strategy and one of DESFA's most important company goals: to activate a Vertical Corridor for moving natural gas from Greece up to Ukraine and vice-versa, a development that will contribute decisively to making Greece a regional natural gas hub and a factor reinforcing supply security in the surrounding region.

- The construction of the Trans Adriatic Pipeline (TAP) is advancing.

“Almost 40 percent steel pipes in Greece and Albania (303km out of 765km) now in the ground (back-filled). Taking steps towards boosting energy security,” the TAP consortium said in a message.

TAP is a part of the Southern Gas Corridor, which is one of the priority energy projects for the European Union. The project envisages transportation of gas from Azerbaijan's Shah Deniz Stage 2 to the EU countries.

The pipeline will connect to the Trans Anatolian Natural Gas Pipeline (TANAP) on the Turkish-Greek border, run through Greece, Albania and the Adriatic Sea, before coming ashore in Italy’s south.

TAP will be 878 kilometers in length (Greece 550 kilometers, Albania 215 kilometers, Adriatic Sea 105 kilometers, and Italy 8 kilometers).

TAP’s shareholding is comprised of BP (20 percent), SOCAR (20 percent), Snam S.p.A. (20 percent), Fluxys (19 percent), Enagás (16 percent) and Axpo (5 percent).

- The European Bank for Reconstruction and Development (EBRD) will provide a $100 million loan to LUKOIL Overseas Shah Deniz Ltd to extend additional financing for its share in the second stage of the development of Shah Deniz, an offshore gas exploration and production project in Azerbaijan and one of the largest gas fields in the world, the bank said in a message.

The loan was approved by the Board of Directors of the EBRD and will be directed to a project which includes two additional bridge-linked offshore gas platforms, 26 subsea wells, 500 kilometers of subsea pipelines, and the expansion of the gas plant at Sangachal Terminal.

- Canada’s Zenith Energy Ltd., the dual listed international oil & gas production company operating the largest onshore oilfield in Azerbaijan, has successfully restored the production at well M-66 in the Muradkhanli field, the company said in a message.

According to the message, the resumption of work at the well is part of a larger, systematic program towards economically maximizing production at non-producing and underperforming wells across Zenith’s 642.4 square kilometer contract area.

SOCAR and Zenith Aran Oil Company signed a Rehabilitation, Exploration, Development and Production Sharing Agreement (REDPSA) in March 2016 for a block that includes the Muradkhanli, Jafarli and Zardab oilfields.

Zenith holds a 80-percent participating interest in the three fields within the contract area – Muradkhanli, Jafarli and Zardab – while a SOCAR Oil affiliate company (fully owned by SOCAR) retains the remaining 20 percent. The duration of the agreement is 25 years, with a potential extension of 5 additional years.

b) Processing

Azerbaijan produced 2.82 million tons of oil products in January-July 2017 as compared to 3.14 million tons in the same period of 2016, country’s State Statistics Committee reported.

SOCAR, which is the sole producer of oil products in Azerbaijan, is currently modernizing its processing facilities due to increased fuel consumption in the country.

Azerbaijan produced 730,100 tons of gasoline in January-July 2017, which is 7.2 percent more than in the same period of 2016.

Azerbaijan produced 5.17 million tons of oil products in 2016 as compared to 5.45 million tons in 2015.

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

Oil products

January-July 2017 (tons)

January-July 2016 (%)










Diesel fuel



Fuel oil





by 3,8 times

Oil bitumen



Oil coke



2. Chemical complex

In January-July 2017, 61,900 tons of polyethylene was produced in Azerbaijan, that is by 0.4 percent more than in the same period of 2016, says a report of the country’s State Statistics Committee.

Meanwhile, 32,400 tons of propylene was produced in Azerbaijan in January-July 2017, which is by 2.5 percent less than in the same period of 2016.

During the mentioned above period, 63,800 tons of ethylene (growth of 0.2 percent as compared to January-July 2016) was produced in Azerbaijan.

Production of main chemical products:


January-July 2017

Compared to January-July 2016


Nitrogen (M cubic meters)



Polyethylene (k tons)



Propylene (k tons)



Isopropyl alcohol (k tons)



Paint products (k tons)



Iodine (tons)



Oxygen (k cubic meters)



Ethylene (k tons)



3. Electricity

­Azerbaijan’s power plants generated 13.16 billion kilowatt hours of electricity in January-July 2017, which is by 1.7 percent more than in the same period of 2016.

According to the report, 12.61 billion kilowatt hours of the total electricity generated in January-July 2017 accounted for commercial electricity, which is by 2 percent more than in the same period of 2016.

Thermal power plants generated 11.37 billion kilowatt hours of the total commercial electricity in January-July 2017, or by 3 percent more than in the same period of 2016.

Azerbaijan’s hydro-power plants generated 1.2 billion kilowatt hours of commercial electricity in January-July 2017, which is by 5.8 percent less than in the same period of 2016.

Wind farms produced 8.5 million kilowatt hours of electricity, while solar power plants generated 25.3 million kilowatt hours of electricity in the reporting period.

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