Gas production in Azerbaijan increases 0.7% in January, oil production drops 5.6%

BAKU. Feb 13 (Interfax) - Azerbaijan increased gas production 0.7% in January 2024 compared to January 2023 to 4.3 bcm, the Energy Ministry press service said, citing operational data.

The Shah Deniz field produced 2.4 bcm of gas (a 4.3% increase); the Absheron field produced 0.13 bcm of natural gas, and the Azeri-Chirag-Gunashli (ACG) block produced 1.1 bcm of associated gas (unchanged versus January 2023).

The State Oil Company of Azerbaijan (SOCAR) produced 0.7 bcm from its own fields (a 12.5% decrease).

Since the start of development through February 1, 2024, 217.4 bcm of associated gas have been produced from the ACG block, and 211.4 bcm of natural gas have come from the Shah Deniz field. Meanwhile, over the entire period, 150 bcm of gas produced in Shah Deniz have been exported to world markets.

The Ministry of Energy also reports that operational data show oil with condensate production in Azerbaijan reaching 2.55 million tonnes in January 2024, which is 5.6% less than the year before.

The ACG block produced 1.4 million tonnes of oil (a 12.5% decrease), which is 56% of Azerbaijan's total output. The Shah Deniz field produced 0.4 million tonnes of condensate (the same level as in January last year), SOCAR produced 0.7 million tonnes of oil with condensate (the same level as in January last year), while the Absheron field produced 50,000 tonnes of condensate.

Oil with condensate exports from Azerbaijan reached 2.1 million tonnes (the same level as in January 2023), of which SOCAR exported 0.3 million tonnes (a 2.2-fold increase). While exports of oil from the ACG block and condensate from the Shah Deniz field totaled 1.8 million tonnes (a 10% decrease).

The Baku Oil Refinery refined 481,000 tonnes of oil in January 2024 (a 14% decrease).

The ministry said that 586 million tonnes of oil have been produced at the ACG block since the start of development as of February 1, 2024, as have 45 million tonnes of condensate from the Shah Deniz field. In total, over 629 million tonnes of oil and condensate from ACG and Shah Deniz have been exported to world markets to date.

The JOCAP operating company (Joint Operating Company of Absheron Petroleum B.V.) has produced 930 mcm of natural gas and 350,000 tonnes of condensate from the Absheron field in the Caspian Sea since July 2023.

As reported, gas production in Azerbaijan totaled 48.497 bcm in 2023 (a 3.8% increase versus 2022). Commercial gas production reached 36.414 bcm (a 4.2% increase). Oil production with gas condensate in Azerbaijan totaled 30.190 million tonnes in 2023, 7.5% less than in 2022.

The government forecasts gas production of 49.064 bcm in 2024, including 36.780 bcm of commercial gas. Oil production is forecast at 29.492 million tonnes.

The contract for the development of the Azeri, Chirag and deep-water Gunashli fields was signed in 1994. It expired in 2024. However, in September 2017, a new contract for the development of the ACG block, lasting through 2050, was signed.

Under the new contract, the share of British BP plc (project operator) is 30.37%, SOCAR has 25%, Hungarian MOL has 9.57%, American ExxonMobil owns 6.79%, Indian ONGC Videsh has 2.31%, Japanese Inpex Corp. and ITOCHU Oil have 9.31% and 3.65%, respectively, Norwegian Equinor owns 7.27%, and Turkish TPAO owns 5.73%. In December 2023, Equinor signed an agreement to sell its share in the project to SOCAR. The transaction will be considered completed after fulfillment of a number of obligations by the parties.

The contract for the development of the Shah Deniz field was signed in 1996. The parties' shares in the contract are currently as follows: BP (operator - 29.99%), LUKOIL (19.99%), TPAO (19%), Azerbaijani Cenub Qaz Dehlizi (21.02%), and Iranian NICO (10%). Gas production from the Shah Deniz field began in December 2006.

TotalEnergies and SOCAR announced on July 10, 2023 the start of production as part of the first phase of development of the Absheron field. The field is being developed by JOCAP, which was established by SOCAR Absheron (50%) and Total E&P Absheron (50%). The contract was signed for a period of 30 years. The contract area is 747 sq. km.