Azerbaijan's Oil Production: Barrels And Beyond

Azerbaijan is a significant producer of oil and natural gas, with the industry forming a major source of income for the country. In 2016, the country produced 843,546.25 barrels of oil per day, ranking 24th in the world. The Azeri-Chirag-Deepwater Gunashli (ACG) field is the largest oil field in the Azerbaijan sector of the Caspian Basin, discovered in the 1970s, and is the country's main source of oil for export. In 2022, Azerbaijan produced about 33 million tonnes of oil, and the country has proven oil reserves of 7 billion barrels, accounting for 0.4% of global reserves.

Azerbaijan's oil reserves

Azerbaijan has proven oil reserves of approximately 7 billion barrels as of 2020, ranking 20th in the world and accounting for about 0.4% of the world's total oil reserves. The country's oil reserves have historically fluctuated, with an all-time high of 1,014,088 barrels per day in 2009 and a record low of 60,600 barrels per day in 1960. As of 2016, Azerbaijan's oil reserves were equivalent to 199.8 times its annual consumption, indicating that without net exports, there would be about 200 years of oil left at current consumption levels.

The Azeri-Chirag-Deepwater Gunashli (ACG) field, located about 100 km east of Baku, is the largest oil field in the Azerbaijan sector of the Caspian Basin. It was discovered in the early 1970s when Azerbaijan was part of the Soviet Union and comprises a series of individual reservoir horizons located 2,000 to 3,500 meters beneath the Caspian seabed. The ACG field is the main source of oil for export in Azerbaijan and is responsible for about 65% of the country's current oil production.

The State Oil Company of the Republic of Azerbaijan (SOCAR) is a major source of income for the Azerbaijani government and plays a significant role in the country's economy. SOCAR has stakes in all production-sharing agreements (PSAs) and operates in various aspects of the oil and gas industry, including exploration, production, transportation, and marketing.

Azerbaijan has a long history of oil production, dating back to ancient times. There is evidence of petroleum being used in trade as early as the 3rd and 4th centuries, and the famous traveller Marco Polo described a spring of oil in the region in his accounts. The country has also been a birthplace of the modern oil industry, with the first detailed description of the Baku oil industry made by Engelbert Kaempfer in 1683.

In recent years, Azerbaijan has also become a significant natural gas producer, with the BP-operated Shah Deniz field being the country's largest gas development. The Southern Gas Corridor (SGC) pipeline, comprised of the South Caucasus Pipeline Expansion (SCPX), the Trans Anatolian Pipeline (TANAP), and the Trans Adriatic Pipeline (TAP), supplies natural gas to Europe, with a capacity of 6 billion cubic meters of gas per year.

Oil production in Azerbaijan

Azerbaijan has a rich history of oil production and is one of the birthplaces of the oil industry. The country holds 7 billion barrels of proven oil reserves, ranking 20th in the world and accounting for about 0.4% of the world's total oil reserves.

The Azeri-Chirag-Deepwater Gunashli (ACG) field, located about 100 km east of Baku, is the largest oil field in the Azerbaijan sector of the Caspian Basin. It was discovered in the early 1970s when Azerbaijan was part of the Soviet Union and comprises a series of individual reservoir horizons located 2,000 to 3,500 meters beneath the Caspian seabed. The ACG field is the main source of oil for export in Azerbaijan and is responsible for about 65% of the country's current oil production.

In addition to the ACG field, there are several other oil fields in Azerbaijan, including the Karabakh offshore oil field, the Block D230 offshore oil field, and the Umid-Babek offshore gas field. The country's state oil company, SOCAR, has stakes in all production-sharing agreements and plays a major role in the country's oil and gas industry.

Azerbaijan has invested heavily in modernizing its energy infrastructure, including electricity generation and oil and gas production. The country has also diversified its export routes and import sources to mitigate the risk of supply or demand shocks. Overall, oil production in Azerbaijan is a significant contributor to the country's economy and energy sector.

Oil exports from Azerbaijan

Azerbaijan has proven oil reserves of around 7 billion barrels, ranking it 20th in the world. In 2016, the country produced 843,546.25 barrels of oil per day, of which 78% was exported (654,629 barrels per day). Azerbaijan's oil exports are predominantly transported through the Baku-Tbilisi-Ceyhan (BTC) pipeline, which has been operational since 2006 and has a capacity of 1.2 million barrels per day. The BTC pipeline stretches 1,768 km from the Sangachal Terminal near Baku, through Georgia, to the port of Ceyhan in Türkiye (Turkey). From Ceyhan, the oil is shipped by tanker to world markets. In addition to the BTC pipeline, Azerbaijan also exports oil through the Baku-Novorossiysk and Baku-Supsa pipelines.

The Azeri-Chirag-Deepwater Gunashli (ACG) field, located about 100 km east of Baku, is the largest oil field in the Azerbaijan sector of the Caspian Basin. It was discovered in the early 1970s when Azerbaijan was part of the Soviet Union and comprises a series of individual reservoir horizons located 2,000 to 3,500 meters beneath the Caspian seabed. The ACG field is responsible for about 65% of Azerbaijan's current oil production and is the main source of oil for export. In 1994, a consortium of international oil companies led by BP and the Azerbaijani government signed the "Contract of the Century" for the development of the ACG field.

In addition to oil exports, Azerbaijan is also a significant producer and exporter of natural gas. The country's largest gas development is the BP-operated Shah Deniz field, which supplies gas to the Southern Gas Corridor (SGC) pipeline to Europe. The SGC is a strategic infrastructure project that includes the South Caucasus Pipeline Expansion (SCPX), the Trans Anatolian Pipeline (TANAP), and the Trans Adriatic Pipeline (TAP). The SGC became fully operational in January 2021 and supplies natural gas to Türkiye, Italy, Greece, and Bulgaria.

Azerbaijan has a long history in the oil industry, with evidence of petroleum use in trade as early as the 3rd and 4th centuries. The country has been a major source of income for the Azerbaijani government, with the State Oil Company of the Republic of Azerbaijan (SOCAR) playing a pivotal role. However, the industry has also been associated with complex contractual structures and enrichment of the country's ruling elites.

Azerbaijan's oil consumption

In contrast, Azerbaijan's oil production and export levels are much higher. As of 2016, the country produced 843,546.25 barrels of oil per day, ranking it 24th in the world. It exported 78% of its oil production, amounting to 654,629 barrels per day in 2016.

The country's oil reserves are also substantial. As of 2016, Azerbaijan held 7,000,000,000 barrels of proven oil reserves, ranking it 20th in the world and accounting for about 0.4% of the world's total oil reserves. At current consumption levels, these reserves are estimated to last for 200 years, excluding unproven reserves.

Azerbaijan has a long history in the oil industry, dating back to the 3rd and 4th centuries when petroleum was used in trade. The country became one of the birthplaces of the modern oil industry, with the development of oil fields in the Baku region in the 19th century. The industry has played a significant role in the country's economy and social development, with the State Oil Company of the Republic of Azerbaijan (SOCAR) being a major source of income for the government.

In recent years, Azerbaijan has also become a significant natural gas producer, with the Shah Deniz field being one of the world's largest. The country is diversifying its energy sources and investing in renewable energy projects, with a goal to increase the share of renewables in power production to 30% by 2030.

Azerbaijan's oil history

Azerbaijan has a long history as an oil-producing country. There is evidence of petroleum being used in trade as early as the 3rd and 4th centuries, and the famous 13th-century traveller Marco Polo described the abundance of oil in the region, noting that it was used for burning, medicine, and as a salve.

In the 19th century, Azerbaijan was a major player in the world's oil and gas industry. In 1846, more than a decade before the United States drilled its first oil well in Pennsylvania, Azerbaijan drilled its first oil well in Bibi-Heybat. By the beginning of the 20th century, Azerbaijan was producing more than half of the world's supply of oil.

During its early oil boom, between 1885 and 1920, Azerbaijan benefited from the expertise of well-known chemists and geologists from Europe and Russia. Baku's oil barons sought the best advice the scientific world had to offer, consulting figures like German chemist Carl Engler and Russian chemist Dmitry Mendeleyev. As a result, innovative new techniques such as rotary drilling and gaslift were tested for the first time in Azerbaijan.

In 1920, when the Bolsheviks captured Azerbaijan, all private property, including oil wells and factories, was confiscated. The industry was then directed towards the purposes of the Soviet Union, including a tremendous output of oil for World War II.

After World War II, oil production from existing fields began to decline due to overproduction and underinvestment. However, the potential for new discoveries was felt to be present offshore, and in the late 1940s, oil engineers proposed new methods for offshore drilling.

In the 1950s, intensive development of offshore oil deposits began, and in the 1960s and 1970s, several large oil and gas fields were discovered and put into production.

In the 1990s, after gaining independence, Azerbaijan began to attract foreign investment and signed production-sharing agreements with international oil companies. The "Contract of the Century", signed in 1994, led to the development of the Azeri-Chirag-Gunashli (ACG) field, which is now the largest oil field in the Azerbaijan sector of the Caspian Basin.

Today, Azerbaijan remains an important oil and natural gas supplier, particularly for European markets. The country has an estimated 7 billion barrels of proven oil reserves, ranking 20th in the world, and accounting for about 0.4% of global reserves.

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