PremiumReview of oil and gas operations in Azerbaijan (January-August 2013)

1. FEC

а) Oil and Gas Production

Azerbaijan produced 29.1 million tons of oil and gas condensate in January-August 2013 compared to 29.41 million tons in the same period of 2012, the State Statistics Committee reported.

According to the State Statistics Committee, Azerbaijan produced 42.98 million tons of oil and gas condensate in 2012 or by 5.3 percent less than in 2011.

The main volume of oil production in January-July accounted for the Azeri-Chirag-Guneshli block of oil and gas fields and the Shah Deniz gas condensate field, which are developed in cooperation with foreign partners.

Gas production amounted to 11.7 billion cubic meters (tank gas) in January-August 2013 compared to 11.41 billion cubic meters in January-August 2012. Gas production in 2012 totaled 17.24 billion cubic meters (excluding associated gas), which is 5.4 percent more than in 2011.

SOCAR carried out drilling (except joint enterprises and operational companies) of 107,209 meters in January-August 2013, around 100,896 meters of which fell to operation drilling and 6,313 meters to exploration drilling.

SOCAR also started drilling the second exploratory well on Goshadash structure. The design depth of the well, the drilling of which is carried out at Mesozoic sediments, will reach 3,500 meters.

b) Processing

Some 927,900 tons of petrol were produced in Azerbaijan in January-August 2013, which is 9.2 percent more compared to the same period of last year, the State Statistics Committee reported.

According to the State Statistics Committee, Azerbaijan produced about 1.3 million tons of petrol in 2012 or 0.1 percent more than in 2011.

Azerbaijan produced more than 3.43 million tons of the main petroleum products in January-August 2012.

Summary table of production of oil products in Azerbaijan:

The petrol production has almost doubled - from 719,900 tons in 2003 to 1.3 million tons in 2012 in Azerbaijan for 10 years, the State Statistics Committee said.

The increase in petrol production in the country is connected with an increase in demand on the domestic market due to the increased number of vehicles in the country. It has increased by 2.4 times - from 511,500 in 2003 to 1.136 million in 2012 for 10 years.

A tendency of growth of diesel fuel production has been observed for 10 years. During this period, the production volume of this type of oil product increased by 48.6 percent - from 1.64 million tons in 2003 to 2.37 million tons in 2012.

c) Sale

Around 3.41 million tons of oil products were delivered to the Azerbaijani domestic market in January-August 2013, or 9.1 percent more than in the same period of 2012, the State Statistics Committee said.

According to the State Statistics Committee, around 4.8 million tons of petroleum products were delivered to the Azerbaijani domestic market in 2012 or 8.8 percent more than in 2011.

According to the report, in particular, supply of petrol, diesel fuel, jet fuel, oil bitumen, liquefied gas and other petroleum products to the domestic market increased in January-August.

Around 4.47 million tons of Azerbaijani oil products were delivered to consumers (including exports) in January-August or 6.4 percent more than in January-August last year.

Around 76.3 percent of the total volume of petroleum products delivered to customers was sold on the domestic market, while the remaining 23.7 percent went to export.

2. Chemical complex

In January-August 2013, Azerbaijan produced 52,500 tons of aluminium sulphate or barium, which is by 6.8 percent more than in the same period in 2012, the Azerbaijani State Statistics Committee said.

According to the State Statistics Committee, an increase in production was observed in most categories of main chemical products in the country in January-August.

Production of basic chemical products:

The country produced 18,480 tons of hard polyethylene pipes, tubes and hoses in January-August, which is 6.7 percent less than the same period in 2012. Also the country produced 416 tons of porous polyurethane plates and strips, which is 23.8 percent more than in January-August 2012.

The "Ethylene -Polyethylene" plant, which is now the main base enterprise of SOCAR's Azerkimya production association processed 198,000 tons of raw materials from January to August this year, head of the production association Mukhtar Babayev said. According to him, during this period, the production of the main products increased following a partial transition from liquid raw materials to gas. The use of the gas fraction obtained as a result of oil processing at the Heydar Aliyev refinery, as a raw material at the chemical enterprises is stipulated by high efficiency in the production of monomers for polyolefines. "As around 46.9 percent of recycled raw materials went to light gasoline fraction and stable gasoline, 34.4 percent - butane-propane and 18.7 percent - stripped gas, the output of the main base product was 42.2 percent," he said.

For comparison: around 98 percent of recycled materials fell to light gasoline fraction and stable gasoline, while 37.3 percent - the share of the main base product in 2010.

3. Electricity

Azerenergy company (production and distribution of electricity in Azerbaijan) generated more than 14.3 billion kilowatt / hours of electricity in January-August compared to about 14.5 billion kilowatt / hours in the same period of 2012.

In August, the company generated about 1.7 billion kilowatt / hours of electricity compared to about 1.8 billion kilowatt / hours in August 2012.

The planned electricity flow with Russia, Iran, Turkey and Georgia was continued during this period.

The total capacity of the power plants owned by Azerenergy exceeds 6000MW. There are more than 200 substations with a capacity of 500, 330, 220 and 110 kilovolt amperes, as well as 9 hydropower plants (1,023 MW) and 13 thermal power plants (5,252 MW) on its balance sheet.

The capacity of the country's energy system increased by 40 per cent amounting to 6275 megawatt in 2003-2012. This paves the way for production of 22-24 billion kilowatt/h of electricity per year which exceeds the country's maximum demand for electricity by 25 to 27 per cent, an article of Azerbaijan's Minister of Industry and Energy Natig Aliyev published in Respublika newspaper said. "The volume of electricity per capita was brought to 2220 kilowatt/h which is at the level of Europe's developed countries," Aliyev stressed.

According to the forecast of the Ministry of Industry and Energy, electricity generation in Azerbaijan will exceed 25 billion kilowatts per hour in 2015, the ministry said.

According to the forecast, the country will produce around 23.45 billion kilowatts per hour in 2013, 24.35 billion kilowatts per hour in 2014, 25.17 billion kilowatts per hour in 2015. Nearly 90 per cent of electricity in Azerbaijan is produced in thermal power stations and the remaining part, in hydro power stations. This ratio will remain in the medium term.

According to the ministry, the production capacity of Azerbaijan's energy system amounts to 6,300 megawatts, 30 per cent or 2,000 megawatts of which constitutes the system's reserve capacity.

"As a result of growth in production capacity and renovation of the system, Azerbaijan turned from the importer of electricity to the exporting country. Currently, the country's export potential amounts to 8 billion kilowatts per hour," the ministry said.