Review of oil and gas operations in Azerbaijan (jan.-sept. 2012)

1. FEC

a) Oil and gas

In September Baku hosted a meeting of the steering committee for the development of the block of "Azeri-Chirag-Guneshli" gas fields, which was attended by the leadership of SOCAR, the Economic Development Ministry, the State Oil Fund, BP-Azerbaijan, as well as representatives of other partners on the project. The main topic of discussions was oil production at the "ACG" and opportunities for optimal operation of the block in the short and long term.

The SOCAR Geophysics and Geology Department continued drilling of engineering-geological wells on the structures Oguz and Western Absheron in the Azerbaijani sector of the Caspian Sea September. Sonar, bathymetric works were held from M.Suleymanov vessel, and seismic profiling on the structures and fields Oguz, D-30, Oil Rocks, Guneshli continuous.

SOCAR-AQŞ has completed the drilling of the Gunashli-13 platform in the shallow part of Guneshli in the Azerbaijani sector of the Caspian Sea. According to the report, it is the fastest drilled well in the field. The design depth was 3,000 meters, but its drilling was provided at a depth of 3,009 meters within 42 days. Usually 90 days is required.

The State Oil Company of Azerbaijan (SOCAR) has started gas supplies from "Umid" field to the country's gas transportation system. He said daily flow rate of the well, from which supplies are made, is 1.2 million cubic meters of gas and 150 tons of condensate.

In January - September 2012, Azerbaijan produced over 32.83 million tons of oil and gas condensate, which is 7.1 percent less than in January-September 2011. In total, Azerbaijan produced 45.37 million tons of oil in 2011 compared to 50.83 million tons in 2010. The bulk of oil production fell to Azeri-Chirag-Guneshli (ACG) offshore fields and Shah Deniz gas condensate field that are developed in cooperation with foreign partners.

Some 12.83 billion cubic meters of gas were produced in January-September, which is 5.3 per cent more than in the same period of 2011. About 26 billion cubic meters of gas were extracted in the country in 2011 compared to 26.23 billion cubic meters of gas in 2010.

According to the forecasts, around 45-47 million tons of oil will be extracted in Azerbaijan in 2012, head of the Azerbaijani Ministry of Industry and Energy's office Rasim Mammadov said. He said that the volume of gas production is forecast at 27 and more billion cubic meters.

б) Refinery

Azerbaijan produced 965,600 tons of gasoline in January - September, which is 2 percent more compared to the same period last year, the State Committee on Statistics said. Azerbaijan produced 3.6 million tons of main petroleum products in total in January-September.

Summary table of oil production in Azerbaijan:

c) Sale

More than 3.57 million tons of oil products were delivered to the Azerbaijani domestic market in January-September compared to 3.2 million tons in January-September 2011, the State Statistics Committee said.

Roughly 939,100 tons of the total volume of oil products delivered to consumers within the country fell to petrol, 928,600 tons - diesel fuel, 360,700 tons - jet fuel, 269,600 tons - fuel oil, 227,000 tons - petroleum bitumen, 86,100 tons - liquefied gas, 11,200 tons - lubricants and 749,300 tons - other petroleum products.

In total, over 4.78 million tons of Azerbaijani oil products were delivered to consumers (including exports) in January-September. Around 74.7 percent of the total volume of oil products delivered to consumers, were sold in the domestic market, while the remaining 25.3 percent - transported for export.

2. Chemical complex

Azerkimya Production Unit (production of chemical products) of the State Oil Company of Azerbaijan (SOCAR) produced 20,300 tons of propylene in January-September, which is 47.5 percent more compared to the same period of 2011.

There was a decrease on many kinds of basic chemical products produced by the production association in January-September.

Production of basic chemical products:

In January-September, the country produced more than 21,330 tons of solid polyethylene pipes, tubes and hoses, which is 311.9 percent more than the same period of 2011. Also the country produced 388 tons of porous polyurethane plates and strips, which is 115.6 percent more than in January-September 2011

SOCAR within its chemical division, namely the Azerkimya Production Association, plans to build new units for production of polypropylene and low pressure polyethylene, SOCAR president Rovnag Abdullayev said. Construction of the new units will be conducted using Canadian equipment. Abdullayev said that it is supposed that the construction of each of the units would cost about 80-100 million manat.

SOCAR will begin transporting petrochemical products through its own Kulevi oil terminal in Georgia in the near future. EP-300 complex (Ethylene-Polyethylene plant) will be commissioned after an overhaul next week. The manufactured propylene products will be exported through the Kulevi terminal. Regarding the monthly transportation volumes of chemical products, SOCAR representative said that the cargo turnover is expected to reach 4500 tons.

3. Electricity

In January-September, Azerbaijan produced approximately 15.38 billion kilowatt / hours of electricity, which is 10.5 percent more than the same period of 2011.

In 2011, the country produced more than 20 billion kilowatt / hours of electricity, which is 8.4 percent more than in 2010.