Azerbaijan - Country Commercial Guide
Last published date: 2020-08-22


Through a series of production sharing agreements (PSAs) signed beginning in the mid-1990s, Azerbaijan succeeded in attracting significant foreign investment from major international oil companies (IOCs).  This investment led to a rapid increase in mainly offshore oil production, greatly enriching the country and creating opportunities for U.S. businesses.  A consortium of IOCs led by BP and the Azerbaijani government agreed to the “Contract of the Century” in 1994 for the development of the Azeri-Chirag-Deepwater Gunashli (ACG) oil field, which was extended to 2049.  The ACG field is responsible for about 75% of the country’s current oil production.  Azerbaijan’s petroleum and liquids production is largely transported via the Baku-Tbilisi-Ceyhan pipeline, with smaller volumes transiting Georgia to the Black Sea.  IOCs continue to explore other oil prospects in Azerbaijan’s portion of the Caspian Sea.  State oil company SOCAR has stakes in all PSAs and has increased its share in all recent PSAs to 50% as part of the government’s current vision for production-sharing.

Azerbaijan has more recently also become a significant natural gas producer.  The largest known gas reservoir in Azerbaijan’s territorial offshore is the BP-operated Shah Deniz field, which is currently in its second phase of development.  The Southern Gas Corridor (SGC) is a $40 billion project to bring gas from the second stage expansion of the Shah Deniz field from Azerbaijan across Georgia and Turkey to Europe.  The SGC spans 2,240 miles, crosses six countries, and involves a number of major companies.  It comprises four parts: phase 2 development of the Shah Deniz gas field (SD2); expansion of the South Caucasus Pipeline (SCPX running from the Sangachal gas terminal near Baku to Azerbaijan’s border with Georgia; construction of the Trans Anatolian Pipeline (TANAP), which runs from Turkey’s border with Georgia to Turkey’s border with Greece; and construction of the Trans Adriatic Pipeline (TAP), which runs from Greece’s border with Turkey across Albania and under the Adriatic Sea to Puglia, Italy.  The project will supply 6 billion cubic meters of gas per year (bcma) to Turkey and up to 10 bcma to Europe.  SD2, SCPX, and TANAP (as far as Eskisihir, Turkey) are completed. TAP is built, but is undergoing final testing for delivery in late 2020.


Other fields either in exploration or early development phases include the Absheron offshore gas field (foreign partner: Total), Umid-Babek offshore gas field (SOCAR-developed) Shafag-Asiman offshore gas field (BP), Block D230 offshore oil field (BP), Muradkhanly-Jafarly-Zardab onshore field (Zenith Energy), Govsany-Zykh onshore field (Global Energy), and the Ashrafi-Dan Ulduzu-Aypara and Karabakh (Equinor) offshore oil and gas fields.

Azerbaijan is developing a new Oil-Gas Processing and Petrochemical Complex which will consist of a gas processing plant, petrochemical plant, a power supply unit to be operational by 2020 and an oil refinery expected to be operational in the early 2030s.

Growth in petroleum product demand is being driven largely by growth in the country’s construction and transportation sectors.  Modernization of Azerbaijan’s only refinery, the Heydar Aliyev Baku Oil Refinery, is expected to be completed by 2021, enabling the country to better meet growing demand, add export potential, and reduce associated environmental pollution.  Modernization will increase the plant’s production capacity from 6 million to 7.5 million tons per year.  The three-phase modernization project to be completed by 2021 includes a bitumen plant, a gas-filling station, storage installations for Euro 5-specification diesel, and a Euro-5 specification A-92/95/98 gasoline plant.  After the modernization, annual production of gasoline at the refinery will increase from 1.3 million tons to 2.2 million tons; diesel from 2.2 million tons to 2.9 million tons; and aviation kerosene from approximately 700,000 tons to 1 million tons.

Oil, gas, and related petroleum products account for over 90% of Azerbaijan’s total goods exports.  Azerbaijan exports hydrocarbons to Turkey, Georgia, Italy, Egypt, Greece, Lebanon, Singapore, Ukraine, Afghanistan, Tajikistan, Uzbekistan, Malta, Libya, Romania, China, Spain, the Bahamas, and elsewhere.


· State Oil Company of Azerbaijan:

· Ministry of Energy of Azerbaijan:

· BP Caspian:

· Caspian World:

· U. S. Energy Information Administration:

· State Statistics Committee of Azerbaijan: