BAKU, Azerbaijan, November 13. Under its base-case scenario, S&P expects a gradual decline in hydrocarbon production, which could lead to further investments in upstream operations of Azerbaijan’s state oil company SOCAR, Trend reports.
S&P notes that SOCAR’s own assets production in 2024 was of 7.5 million tons of oil and 7.7 billion cubic meters of natural gas.
“SOCAR also has minority stakes in projects led by international players, the main ones being Azeri-Chirag-Guneshli (ACG) and Shah-Deniz. While we view the company’s reserves as ample, we expect output to keep gradually declining under the current production profile, ACG being well past its peak and Shah-Deniz having recently seen a decline in production,” reads the report.
S&P analysts note that given that upstream is the segment contributing the most to SOCAR’s EBITDA and has been the core of its operations, it would expect investments to fund new projects in undeveloped areas of the country or develop existing ones.
“To reflect these expected investments, we include in our base-case about AZN3 billion of capex per year, above the levels of the past two years. The nearly completed Shah Deniz 2 project and Shah Deniz Compression project signed earlier this year illustrate this ongoing effort to increase production output through further investments.”