Wood Mackenzie assesses nation’s hydrocarbon production potential

Extension of the contract for development of Azeri-Chirag-Guneshli (ACG) block of oil and gas fields to 2050 and first production from Shah Deniz Phase Two (on schedule for H2 2018) are globally significant milestones that will help shape the outlook for several decades, she said.

"However, oil and gas each have increasingly different trends. Azerbaijan's oil production is declining and the goal is to manage that decline as well as possible – at ACG and SOCAR-operated fields. In contrast, sales gas output will almost double by 2025 – thanks to Shah Deniz Phase Two alone," noted Sherman.

The principal research analyst pointed out that a priority for Azerbaijan and SOCAR is to diversify the outlook, so that production and international investment are not so reliant on these two megaprojects.

"Respective talks with Total and Statoil to develop Umid-Babek and Karabakh are ongoing in 2018," she said, adding that drilling for early production at the Absheron gascondensate field has already started.

Equally, Azerbaijan's diverse potential extends across the energy value chain, said Sherman.

"The SOCAR Polymer and SOCAR Carbamide projects will be launched in 2018. Progress on the larger SOCAR GPC petrochemical project is also a top priority," she said Sherman.

Wood Mackenzie is an international consulting company providing a wide range of services in the fuel and energy industry. The company was founded in 1973 and its headquarters is located in Edinburgh, Scotland.

In Azerbaijan, Wood Mackenzie works both with representations of its global clients and with local companies.