Azerbaijan - Country Commercial Guide
Last published date:


Through a series of production sharing agreements (PSAs) signed in the mid-1990s, Azerbaijan succeeded in attracting significant foreign investment from major international oil companies (IOCs).  In 1994, a consortium of IOCs led by BP and the Azerbaijani government agreed to the “Contract of the Century” for the development of the Azeri-Chirag-Deepwater Gunashli (ACG) oil field, Azerbaijan’s main source of oil for export.  The ACG field is responsible for about 65% of the country’s current oil production.  The Baku-Tbilisi-Ceyhan (BTC) pipeline is Azerbaijan’s main export route for oil.  IOCs continue to explore other hydrocarbon prospects in Azerbaijan’s portion of the Caspian Sea.  Azerbaijan’s state oil company SOCAR has stakes in all PSAs.

More recently, Azerbaijan has also become a significant natural gas producer.  Azerbaijan’s largest gas development is the BP-operated Shah Deniz field, which supplies gas for the Southern Gas Corridor (SGC) pipeline to Europe.  The SGC is comprised of three parts: the South Caucasus Pipeline Expansion (SCPX), which runs from the Sangachal gas terminal near Baku through Georgia to the Turkish border; the Trans Anatolian Pipeline (TANAP), which runs from Türkiye’s border with Georgia to Türkiye’s border with Greece; and the Trans Adriatic Pipeline (TAP), which runs from Greece’s border with Türkiye across Albania and under the Adriatic Sea to Puglia, Italy.  SGC became fully operational in January 2021, supplying 6 billion cubic meters of gas per year (bcma) to Türkiye, 8 bcma to Italy, and 1 bcma each to Greece and Bulgaria.  

Azerbaijan is currently pursuing wind and solar projects with the goal of becoming an exporter of green energy to European markets.  The government aims to increase the share of renewables in power production to 30% by 2030 through the phased installation of 1500 MW in renewable generation capacity.  Concessions to promote development of renewables include a 7-year VAT exemption for technical equipment and facilities, customs duties exemption, and in some cases an exemption from land and property tax as well as 50 percent of income tax.          

Leading Sub Sectors

Solar, wind, thermal energy, and associated consulting services in the energy sector all hold opportunities for commercial engagement from U.S. companies.


Other fields in either 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), and the Karabakh (Equinor) offshore oil field.

Growth in the demand for petroleum is largely driven by growth in Azerbaijan’s construction and transportation sectors.  Modernization of Azerbaijan’s only refinery, the Heydar Aliyev Baku Oil Refinery, began in 2022, 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 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, the annual production of gasoline at the refinery is projected to 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 accounted for 91% of Azerbaijan’s total exports in 2022.  Azerbaijan exports hydrocarbons and petroleum products to Italy, India, Spain, Israel, Türkiye, Georgia, Greece, Bulgaria, Croatia, Portugal, Ukraine, China, Canada, Germany, and other countries.

Green Energy Opportunities


Oil Company of Azerbaijan:
of Energy of Azerbaijan
Energy Information Administration (EIA):
Statistics Committee of Azerbaijan: