Azerbaijan's Natural Wealth: Exploring Its Abundant Resources

Azerbaijan is a country with a diverse landscape, from snowy peaks to wide plains, and is known for its rich natural resources. The country's economic strength can be attributed to its proper utilisation of natural resources, including minerals, arable land, water, and its scenic beauty. Azerbaijan has a long history of oil production, with the Absheron Peninsula being one of the world's oldest oil-producing regions. In addition to oil, the country also has an abundance of other natural resources such as natural gas, iron ore, gold, and various other minerals. The country's complex landscape structure has resulted in a variety of natural conditions, including diverse climate, soil, vegetation, and water resources.

Oil and gas fields

Azerbaijan is known for its oil and gas fields, with 2/3 of the country's territory containing rich hydrocarbon deposits. The Absheron Peninsula, the shelf zone of the Caspian Sea, and the Baku and Absheron archipelagos contain the largest number of oil and gas fields. The republic's southeast Shirvan, central Aran, Gobustan, Jeyranchol, Ajynour, and Siyazan regions are also rich in oil. Oil is produced both onshore and in the Caspian Sea, with offshore production accounting for about a quarter of the total.

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 and comprises a series of individual reservoir horizons located 2,000 to 3,500 metres beneath the seabed. The country produced approximately 1.2 billion tons of oil (25% from offshore oil fields) until 1985. The oil produced in Azerbaijan is of high quality, with low sulphuric and paraffin content, and its density varies over a large range (780–940 kg/m3).

Azerbaijan has an estimated 2.5 trillion cubic meters of proven natural gas reserves. The country became a net exporter of natural gas in 2007 with the start-up of the huge Shah Deniz natural gas and condensate field. The largest gas export pipeline is the South Caucasus Pipeline (SCP), which transports gas from the Shah Deniz field through Georgia to Türkiye, parallel to the Baku-Tbilisi-Ceyhan (BTC) crude oil pipeline. The SCP has a capacity of 7 billion cubic meters (bcm) per year, while the second-largest pipeline, Hajigabul-Mozdok, has an annual capacity of 10 bcm.

Azerbaijan's energy mix is heavily concentrated on fossil fuels, with oil and gas accounting for more than 98% of the total supply. While supply security is not a concern, heavy reliance on fossil fuels has negative environmental and economic impacts, including elevated GHG emissions and exposure to fuel price fluctuations.

Arable land and water resources

Agriculture has been one of the most important economic sectors in Azerbaijan for much of its history. In the 1990s, the Azerbaijani government implemented several measures to increase agricultural productivity, including the establishment of an agricultural ministry to oversee agricultural activities in the country. The government also provided subsidies to local farmers and encouraged them to adopt modern agricultural techniques.

Today, most of the agricultural land in Azerbaijan is owned by either the government or cooperatives. Cooperatives are popular because private farmers are unable to take advantage of government subsidies. Despite these efforts, the major challenge facing the country's agricultural sector is the use of child labor.

Azerbaijan is blessed with a vast array of water resources, including both natural and human-made bodies of water such as rivers, lakes, canals, and ponds. There are close to 8,360 rivers flowing within Azerbaijan's borders, with most of them (around 8,190) flowing for less than 16 miles. Only a small fraction of the rivers (less than 25) flow for more than 62 miles. The Kür, Iori, and Araz Rivers are three of the most important waterways in the country.

There are also several massive lakes within Azerbaijan, including Lake Ağgöl, Lake Sarysu, and Ajinohur. Lake Sarysu is the largest lake in the country, with a surface area of roughly 25 square miles. Azerbaijan's water resources are used for various purposes such as irrigation and fishing. The country has a total of 61 reservoirs, with a combined volume of 21.5 cubic kilometers. These reservoirs are built on riverbeds or beyond them and are used mainly for irrigation.

In addition to its arable land and water resources, Azerbaijan also boasts a complex landscape structure that includes snowy peaks, high mountains, foothill fertile soils, and wide plains. This diverse landscape results in a variety of natural conditions, climates, soil types, and water resources. Consequently, the population and farms on the territory are unevenly distributed, and production specialization varies across different regions.

Mineral deposits

Azerbaijan has a wide variety of mineral deposits, including oil, gas, shale, and peat. The country's mineral resources are closely linked to its complex geological structure. The Absheron Peninsula, in particular, has been a significant oil-producing region since ancient times, with extraction dating back to the 7th and 6th centuries BC.

The country's mineral wealth also includes valuable metals such as iron, aluminium, chromite, gold, silver, copper, lead, zinc, cobalt, and molybdenum. These metals are found in various ore deposits, with some located in the mountainous regions.

In addition to metallic minerals, Azerbaijan also boasts non-metallic deposits like limestone, gypsum, anhydrite, bentonite clays, and building materials. The country's diverse landscape, ranging from high mountains to wide plains, contributes to the availability of these natural resources.

The Lesser Caucasus region is particularly noteworthy for its mineral wealth, including ore deposits of iron, titanium, gold, silver, copper, and cobalt. Furthermore, the country has a vast array of mineral springs, earning it the title of the "museum of mineral waters."

The mining industry in Azerbaijan is a significant contributor to its economy, with mineral production accounting for approximately 70% of the nation's industrial output in 2014. The country's natural resources, including its mineral deposits, play a crucial role in its economic strength and development.

Mining resources

Azerbaijan has a complex geological structure that is rich in minerals. The country's mining resources include:

• Oil: Azerbaijan is one of the world's oldest oil-producing regions, with a history of oil extraction dating back to the 7th and 6th centuries BC in the Absheron Peninsula. The country has both onshore and offshore oil fields, with approximately 1.2 billion tons of oil produced until 1985, of which 25% came from offshore oilfields. The oil produced in Azerbaijan is of high quality, with low sulphuric and paraffin content, and a density ranging from 780 to 940 kg/m3. The largest oil and gas-producing regions include Absheron, Shamakhi-Gobustan, Baku archipelagi, and Lower Kuryani.
• Gas: Azerbaijan produces flammable hydrocarbon gases, including soluble gas in oil, gas cap, and pure gas fields. The country has several gas condensate fields, with eight producing oil and gas fields and two prospective field regions.
• Shale and Peat: Shale and peat are also among the combustible minerals found in Azerbaijan.
• Metalliferous resources: The mountainous parts of the republic contain deposits of various metalliferous resources, including iron, aluminum, chromite, gold, silver, copper, lead, zinc, cobalt, and molybdenum ores.
• Non-metallic mining resources: Azerbaijan also has a variety of non-metallic mining resources, such as rock salt, gypsum, anhydrite, bentonite clays, building materials, pyrite, barite, semi-precious and coloured stones, dolomite, and Icelandic quarry.

Energy sources

Azerbaijan is rich in energy sources, particularly oil and natural gas. The country has an estimated 2.5 trillion cubic meters of proven natural gas reserves and 7 billion barrels of oil reserves, accounting for 0.4% of global reserves. Oil and gas fields are found both onshore and offshore in the Caspian Sea, with offshore production contributing about a quarter of the total. The largest oil field in the Azerbaijan sector of the Caspian Basin is the Azeri-Chirag-Deepwater Gunashli (ACG) field, located about 100 km east of Baku.

The country's energy mix is heavily concentrated in fossil fuels, with oil and gas accounting for more than 98% of the total supply. While supply security is not a concern, heavy reliance on fossil fuels has negative environmental and economic impacts. The country is working to diversify its energy sources, with a goal of having renewable energy provide 30% of electricity-generating capacity by 2030.

Azerbaijan has a long history of oil production, dating back to the 7th-6th centuries BC when oil was extracted and delivered to many countries worldwide from the Absheron Peninsula. The republic is one of the world's oldest oil-producing regions, and the extraction and distribution of oil from this region have played a significant role in the country's economy.

In addition to oil and gas, Azerbaijan also has combustible minerals such as shale and peat, as well as ore deposits of iron, titanium, gold, silver, copper, cobalt, chromite, polymetals, and molybdenum. The Lesser Caucasus region is particularly rich in ore deposits.

The country's energy infrastructure includes oil and gas pipelines, with three major pipelines running through the country, owned by BP or the State Oil Company of the Republic of Azerbaijan (SOCAR). Azerbaijan exports oil to its neighbors and European and world markets through these pipelines. The Baku-Tbilisi-Ceyhan (BTC) pipeline is the largest, with a capacity of 1.2 million barrels per day.

Azerbaijan also has two main gas export pipelines: the South Caucasus Pipeline (SCP) and the Hajigabul-Mozdok pipeline. The SCP, with a capacity of 7 billion cubic meters, transports gas from the Shah Deniz field through Georgia to Türkiye. The Hajigabul-Mozdok pipeline originally transported gas from Russia to Azerbaijan until 2007, when the flow was reversed, and gas exports to Russia began in 2010.

The country's electricity sector is dominated by natural gas, which generates 90% of electricity, while large hydropower plants generate 4%. The remaining 6% comes from other renewable sources such as solar, wind, and waste.

Azerbaijan's renewable energy potential offers multiple advantages, including reducing GHG emissions, improving electricity security, and saving natural gas for exports and the petrochemical industry. The country has adopted a law on using renewable energy sources in electricity production and aims to reform its energy market to allow independent generators to enter the sector.

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