Azerbaijan - Country Commercial Guide

This is a best prospect industry sector for this country.  Includes a market overview and trade data.

Last published date: 2021-09-29


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).  This investment led to a rapid increase in 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 65% 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 through Georgia to the Black Sea.  IOCs continue to explore other oil 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.  The largest known gas reserve 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 $33 billion project to bring gas from the second stage expansion of the Shah Deniz field in Azerbaijan across Georgia and Turkey to markets in Europe.  The SGC spans 2,240 miles, crosses six countries, and involves a number of major companies.  It is comprised of four parts: “phase 2” development of the Shah Deniz gas field (SD2); an expansion of the South Caucasus Pipeline (SCPX), which runs from the Sangachal gas terminal near Baku to Azerbaijan’s border with Georgia; the construction of the Trans Anatolian Pipeline (TANAP), which runs from Turkey’s border with Georgia to Turkey’s border with Greece; and the 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.  Per estimates, the project will supply 6 billion cubic meters of gas per year (bcma) to Turkey and up to 10 bcma to Europe.  As of 2021, SD2, SCPX, and TANAP (as far as Eskisihir, Turkey) are completed.  Commercial gas supplies to Europe via the TAP began in November 2020.

Leading Sub Sectors

Solar, wind and thermal energy resources, and relevant consulting services in the area 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), 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, and a power supply unit to be operational by 2020 and an oil refinery expected to be operational in the early 2030s.  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, is expected to be completed by 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 to be completed by the end of 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, 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 account for 85% of Azerbaijan’s total goods exports.  Azerbaijan exports hydrocarbons to Italy, India, Spain, Israel, Turkey, Georgia, Greece, Bulgaria, Croatia, Portugal, Ukraine, China, Canada, Germany, and other countries.


  • State Oil Company of Azerbaijan (SOCAR)
  • Ministry of Energy of Azerbaijan
  • BP Caspian
  • Caspian World:
  • U. S. Energy Information Administration:
  • State Statistics Committee of Azerbaijan: