Country Report

Azerbaijan upstream summary

26 November 2018

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26 November 2018

Azerbaijan upstream summary

Report summary

Upstream industry dominated by two offshore megaprojects - The BP-operated Azeri Chirag Guneshli (ACG) oil field and Shah Deniz gas-condensate field account for the majority of production and investment.ACG focus: ongoing decline management, with PSC extension confirmed - The super-giant ACG oil field peaked at 823,000 b/d in 2010. Output has since declined to below 600,000 b/d. In 2017, BP and partners finalised an extension of the ACG PSC to end-2049. This enabled Front-End Engineering ...

Executive summary
Key facts
Location maps
Key companies
- Key projects
- Other projects
Geology
- Introduction
- South Caspian basin
  - Structural (tectonic) elements
  - Absheron province
  - Gobustan province
  - Lower Kura province and Baku archipelago
- South Caspian deepwater basin
- Stratigraphy
- Reservoirs and source rocks
- North Caucasus-Mangyshlak basin
Exploration
- Licensing
- Licensing and IOC activity
  - Licensing since 1991
  - 1991
  - 1992
  - 1993
  - 1994
  - 1995
  - 1996
  - 1997
  - 1998
  - 1999
  - 2000
  - 2001
  - 2002
  - 2003
  - 2004
  - 2005
  - 2006
  - 2007
  - 2008
  - 2009
  - 2010
  - 2011
  - 2012
  - 2013
  - 2014
  - 2015
  - 2016
  - 2017
  - 2018
- Drilling
  - Drilling activity
- SOCAR activity
- IOC-led activity
  - Onshore
  - Offshore
  - Future drilling plans
- Onshore
- Offshore
- Offshore drilling overview
  - Offshore PSC drilling commitments
  - Offshore drilling challenges
- Active IOC exploration licences (offshore)
  - Absheron (Deep Water)
  - Ashrafi-Dan Ulduzu-Aypara
  - Bahar 2
  - D230
  - Shafag Asiman
  - Shallow Water Absheron Peninsula (SWAP)
- Potential IOC exploration licences (offshore)
  - Goshadash
- Other IOC exploration licences (offshore)
  - Alov
  - Lerik
- Semi-submersible rigs
- Jack-up rig
  - Saturn (formerly Trident 20 / Gurtulush)
- IOC exploration licences (onshore)
  - Joint Study Agreements (JSA)
  - Southwest Gobustan
Reserves and resources
- Oil and gas reserve classification
  - Azerbaijani reserve classification system
  - Azerbaijani gas reserves
  - Wood Mackenzie methodology
- Reserves by basin
- Resources by basin
- Reserves by sector
  - Onshore
  - Offshore
- Reserves by asset
Production
- Liquids
  - Historical liquids production
  - Future liquids production
- Gas
  - Historical gas production
  - Future gas production
  - Gas markets
Infrastructure
- Introduction
  - Overview
  - Oil infrastructure
  - Oil transit
  - Gas infrastructure
- Oil infrastructure
- International pipelines
  - Baku-Tbilisi-Ceyhan (BTC) pipeline
  - Northern Route Export Pipeline (to Novorossiisk, Russia)
  - Western Route Export Pipeline (Baku-Supsa)
- Transit of Central Asian crude (via BTC)
  - Turkmenistan (current)
  - Kazakhstan (previous) - Tengizchevroil (TCO)
  - Kazakhstan (potential) - Kashagan Contract Area
- Ports and terminals
  - Dubendi (Baku port)
  - Sangachal
  - Storage facilities
- Rail infrastructure
  - Baku-Tbilisi-Kars railway
- Refineries
- Gas infrastructure
- International pipelines
  - Southern Gas Corridor
  - Legacy pipelines to/from Iran
  - Legacy pipelines to Georgia
  - Legacy pipeline to/from Russia
  - Legacy pipelines via Armenia (inactive)
- Proposed gas pipelines
  - Trans-Caspian Gas Pipeline (TCGP)
  - Azerbaijan-Iran
  - Turkey-Nakhchivan
- Gas processing / gas-feed facilities
  - Existing facilities
  - Future facilities
- Underground gas storage (UGS)
Costs
- Introduction
- Capital costs
  - Capital expenditure by location
- Operating costs
  - Operating expenditure by location
Policy and regulation
- Key legislation
  - Subsoil Law (February 1998)
  - Energy Law (November 1998)
  - Energy Resources Law (May 1996)
  - Foreign Investment Law (January 1992)
- Other legislation
  - Law on Gas Supply (May 1998)
  - Presidential Decree No. 150 (December 2004) and Internal Regulation of the Ministry of Industry and Energy of the Azerbaijan Republic (May 2006)
  - Law on oil and gas export activities
- Regulatory body
  - Gas regulation
  - New Customs Code
  - State Oil Fund (SOFAZ)
- State oil company
  - Southern Gas Corridor Company (SGC)
- State participation
- International boundaries
- Legal status of the Caspian Sea
  - Overview
  - North Caspian Sea
  - South Caspian Sea
- Licensing
Fiscal terms
- Overview
- Upstream
- Midstream / downstream
- Current fiscal terms
- Production Sharing Contracts (PSCs)
  - State equity
  - Bonuses, rentals and fees
  - Indirect taxes
  - Royalty and other production taxes
  - Local market oil obligation (LMO)
  - Cost recovery
  - Profit sharing
  - Contractor revenue entitlement
  - Product pricing
  - Corporate (or petroleum) income tax (CIT)
  - Additional profit taxes
  - Fiscal/Contractual ring fences
  - Dividend withholding tax
- Risk Service Agreements (RSAs)
  - Sample Cash Flow
  - Marginal government take calculation
- Historical background
  - Joint Venture contracts (JVs)
  - PSCs

Tables and charts

This report includes 56 images and tables including:

Key facts: Table 1
Location maps: Image 1
Remaining Commercial and Technical Reserves at 01/01/2018

Liquids and Gas Production 2018
Azerbaijan: sedimentary basins and geological trends
Simplified tertiary stratigraphy
Absheron province: Productive Sequence litho-stratigraphic units
Middle and Upper Productive Sequence: local stratigraphic nomenclature
Reserves and resources: Table 2
Remaining and produced reserves at 01/01/2019 (p+p)
Reserves and resources: Table 3
Reserves and resources: Table 4
Infrastructure: Table 1
Infrastructure: Table 2
Infrastructure: Table 3
South Caspian basin: tectonic elements
Exploration: Table 1
Block awards and relinquishments
Active licences: exploration and production
Reserves and resources: Table 1
Liquid reserves by region at 01/01/2019 (p+p)
Gas reserves by region at 01/01/2019 (p+p)
Production: Table 1
Production: Table 2
Liquids production by sector
Production: Table 3
Production: Table 4
Liquids production by basin
Production: Table 5
Production: Table 6
Liquids production by field
Production: Table 7
Production: Table 8
Gas production by sector
Production: Table 9
Production: Table 10
Gas production by basin
Production: Table 11
Production: Table 12
Gas production by key fields
Azerbaijan: oil infrastructure
Azerbaijan: rail network
Azerbaijan: gas infrastructure
Infrastructure: Table 4
Costs: Table 1
Costs: Table 2
Costs: Table 3
Costs: Table 4
Map of agreed Russia-Kazakh line, as well as Azerbaijan and Turkmenistan proposed areas
Fiscal terms: Table 1
Fiscal terms: Table 2
Fiscal terms: Table 3
Fiscal terms: Table 4
Fiscal terms: Table 5
Fiscal terms: Table 6
Fiscal terms: Table 7