Azerbaijan Oil and Gas Report

 Published On: Sep, 2016 |    No of Pages: 79 |  Published By: BMI Oil and Gas | Format: PDF
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BMI View: After stabilisation in 2016, we forecast renewed downside to Azeri oil production from 2017 driven by the country's maturing asset base and a lack of new output brought on stream. Condensates production from the Shah Deniz Phase II will offer temporary upside in 2019, but this will be insufficient to sustainably reverse the overall trend of decline. Our outlook on gas production is broadly bullish, with substantial reserves under development and a strong prospective resource base. The refining sector will continue to struggle, due to low complexity and ageing infrastructure and a continued lack of investment.

Latest Updates and Key Forecasts
-The country boasts substantial, prospective and underexplored acreage, in particular offshore in the South Caspian basin. SOCAR has also announced plans to restart onshore exploration, targeting ultra-deep oil deposits.
-A shortage of drilling rigs continues to delimit drilling activity in the Caspian Sea. A spate of exploration and appraisal, development and production wells are set to be spud by 2017; SOCAR needs to secure additional drilling rigs in the coming quarters if it is to avoid the emergence of a major bottleneck in its upstream.
-Oil output decreased in 2015, according to reports by SOCAR. In part this stemmed from planned maintenance works, but the bulk of the loss came from faster-than-expected depletion rates at the major ACG fields. After a temporary stabilisation we expect this trend to continue in 2017, despite increased gas reinjection boosting recovery.
-The gas sector is set for strong growth, driven in large part by development of the Shah Deniz II, which reached FID in 2013 and is targeting first gas from 2018.

BMI Industry View . 7
Table: Headline Forecasts (Azerbaijan 2014-2020) 7
SWOT .. 9
Oil & Gas SWOT ..... 9
Industry Forecast 10
Upstream Exploration ...... 10
Latest Updates ..... 10
Structural Trends . 10
Upstream Projects . 14
Table: Upstream Projects . . 14
Upstream Production - Oil 15
Latest Updates ..... 15
Structural Trends . 15
Table: Oil Production (Azerbaijan 2014-2019) . . . . 17
Table: Oil Production (Azerbaijan 2020-2025) . . . . 17
Upstream Production - Gas ......... 18
Latest Updates ..... 18
Structural Trends . 18
Table: Oil Indexation In European Gas Contracts . 21
Table: Gas Production (Azerbaijan 2014-2019) . . . 22
Table: Gas Production (Azerbaijan 2020-2025) . . . 22
Refining ..... 23
Latest Updates ..... 23
Structural Trends . 23
Table: Refining Capacity and Refined Products Production (Azerbaijan 2014-2019) 25
Table: Refining Capacity and Refined Products Production (Azerbaijan 2020-2025) 26
Refined Fuels Consumption ......... 27
Latest Updates ..... 27
Structural Trends . 27
Table: Refined Products Consumption* (Azerbaijan 2014-2019) . 29
Table: Refined Products Consumption* (Azerbaijan 2020-2025) . 29
Gas Consumption .. 30
Latest Updates ..... 30
Structural Trends . 30
Table: Gas Consumption (Azerbaijan 2014-2019) . 32
Table: Gas Consumption (Azerbaijan 2020-2025) . 32
Trade - Oil . 33
Latest Updates ..... 33
Crude Oil Trade .. 33
Structural Trends . 33
Table: Azerbaijan Crude Oil Assay . . 33
Table: Crude Oil Net Exports (Azerbaijan 2014-2019) . 36
Table: Crude Oil Net Exports (Azerbaijan 2020-2025) . 37
Refined Fuels Trade Forecast ..... 37
Structural Trends . 37
Table: Refined Fuels Net Exports (Azerbaijan 2014-2019) . . 38
Table: Refined Fuels Net Exports (Azerbaijan 2020-2025) . . 39
Trade - Gas (Pipeline and LNG) ... 40
Latest Updates ..... 40
Structural Trends . 40
Table: Gas Net Exports (Azerbaijan 2014-2019) . . . 42
Table: Gas Net Exports (Azerbaijan 2020-2025) . . . 43
Industry Risk Reward Ratings 44
Central And Eastern Europe Oil & Gas Risk/Reward Index ....... 44
Table: CEE: High Risk, Low Reward 44
Table: CEE Upstream, Downstream And Overall Risk/Reward Indices . . . . 45
Table: CEE Upstream Risk/Reward Index 48
Downstream: Turkish STAR Only Bright Spot In Weak Market . 48
Table: CEE Downstream Risk/Reward Index . 51
Azerbaijan - Risk/Reward Index ... 52
Upstream Index ... 52
Downstream Index ......... 52
Market Overview . 53
Azerbaijan Energy Market Overview ....... 53
Regulatory Structure ...... 53
Licensing Regime . 53
Fiscal Regime ..... 53
Table: Azerbaijan PSC Main Fiscal Terms . . . . 54
Oil & Gas Infrastructure ... 55
Refineries . 55
Table: Azerbaijan - Main Refineries 55
Oil Pipelines ....... 55
Table: Azerbaijan - Main Oil Pipelines . . 55
Gas Pipelines ...... 55
Table: Azerbaijan - Main Gas Pipelines . . 55
Oil Terminals & Ports ..... 56
Table: Azerbaijan - Main Oil Trade Facilities 56
Oil Storage Facilities ...... 56
Table: Azerbaijan - Main Oil Storage Facilities . . . 56
Gas Storage Facilities ..... 56
Table: Azerbaijan - Main Gas Storage Facilities . . 56
Competitive Landscape 57
Competitive Landscape Summary 57
Table: Key Domestic And Foreign Companies 59
Table: Key Upstream Players . . 59
Table: Key Downstream Players . . . . 60
Company Profile .. 61
SOCAR ...... 61
Latest Updates ..... 61
Table: Major Upstream Assets In Azerbaijan . 62
Table: Key Financial Data, USDmn . 62
AIOC ........ 63
Latest Updates ..... 63
Table: Major Upstream Assets In Azerbaijan . 64
Regional Overview ........ 65
Central And Eastern Europe Oil & Gas Regional Overview ....... 65
Oil Production: Oil Powerhouses Falter On Weak Prices ........ 65
Oil Consumption: Short-Term Weakness As Russia Struggles ... 66
Refining Capacity: Modernisation Key To Competing ... 67
Natural Gas Production: Gas Ramp-Up Demand-Dependent ... 68
Table: Central Asia-China Gas Pipeline Expansions . . . 69
Gas Consumption: Demand Falters On Struggling Economies .. 70
Table: Central & Eastern Europe Oil & Gas Production & Consumption, Refining Capacity & Trade . 71
Glossary ..... 72
Table: Glossary Of Terms . 72
Methodology ........ 74
Industry Forecast Methodology .. 74
Source ..... 76
Risk/Reward Index Methodology . 76
Table: Bmi's Oil & Gas Upstream Risk/Reward Index . . 78
Table: Weighting 79
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