The Republic of Azerbaijan is one of the world’s most important hubs for the exploration and development of oil and gas. It produces about 800,000 barrels of oil a day, as well as 1 billion cubic metres of gas. Its rich history of oil, as well as the 1994 signing of the “contract of the century” which facilitated the exploration of the country’s vast Caspian oil and gas reserves, has cemented Azerbaijan as a strong force in the global energy sector.
Birthplace of Oil
Azerbaijan is located at the crossroads of Eastern Europe and Asia, close to Russia, Georgia, Armenia and Iran. The country was one of the first to begin the exploration of oil as early as the 1840’s and at the turn of the 20th century, accounted for half of the world’s total oil production. Therefore, the country is considered as one of the birthplaces of the oil industry. Unsurprisingly, the country’s fortunes have been tightly linked to those of the petroleum industry.
More recently, Azerbaijan has been recognised in areas other than energy. The country hosted the Eurovision song contest in 2012 and has now won the prestigious right to hold the first ever European games in the summer of 2015. However, Azerbaijan has probably previously been known by England football fans for the part it played in the 1966 World Cup final. Azerbaijani linesman Tofiq Bahramov gave the decision that the ball was indeed over the line, for the goal Geoff Hurst scored in extra time that took the score up to 3-2, helping England to go on to win the World Cup (4-2).
Fircroft’s Azerbaijan office
was opened in Baku in 2001; one of our first overseas locations. Over 12 years later, both Azerbaijan and Fircroft have undergone significant transformations. In fact, in February 2014 our Baku office relocated to new premises in the Azure business centre near Port Baku. The new location in the impressive purpose built centre allows our team to be close to our major clients in the region and even has built in apartments and a shopping centre!
Southern Gas Corridor
The Southern Gas Corridor project is set to further strengthen Azerbaijan’s role in the global energy sector. The landmark project will allow Europe to both diversify its sources of hydrocarbon supplies and also strengthen its energy security; opening up new and profitable markets in Turkey, Greece, Bulgaria and Italy.
The Corridor is part of the impressive Shah Deniz project which includes several complex elements including the drilling and completion of 26 subsea wells and the construction of two bridge-linked platforms. There will also be new processing and compression facilities onshore at Sangachal. The scale of the project has already created many jobs and is likely to continue to do so now the Southern Gas Corridor has received the green light. The total cost of this stage of the project is expected to be around $28 billion with the first gas targeted for late 2018.
Both the short and long term future of Azerbaijan’s oil and gas industry look bright. The country expects to extract 43 million tons of oil in 2014
, with proven oil reserves standing at around the 13 billion barrel mark (2013). Large offshore Caspian oil and gas fields and extensive onshore pipelines fortify Azerbaijan’s importance to the sector. The Baku-Tbilisi-Ceyhan pipeline alone can transport one million barrels of oil per day.
One of the unique things about Azerbaijani oil (Naftalan) is that its properties are extremely rare. It is used around the world for medicinal purposes, in addition to more traditional uses in herbicides, fertilisers, kerosene, synthetic rubber and plastics. The rarity of Azerbaijan’s oil, combined with projects such as the Southern Gas Corridor and SOCAR’s (the State Oil Company of Azerbaijan Republic) untapped offshore fields, will allow Azerbaijan to continue as an important player in the global oil and gas industry.
If you would like the opportunity to shape the future of Azerbaijan’s oil and gas industry, please browse our current opportunities
or contact our Baku office