Europe / Caspian / CIS

Country profile: Azerbaijan

Location:

Southwestern Asia, bordering the Caspian Sea, between Iran and Russia, with a small European portion north of the Caucasus range

Climate:

dry, semiarid steppe

Terrain:

large, flat Kur-Araz Ovaligi (Kura-Araks Lowland) (much of it below sea level) with Great Caucasus Mountains to the north, Qarabag Yaylasi (Karabakh Upland) in west; Baku lies on Abseron Yasaqligi (Apsheron Peninsula) that juts into Caspian Sea

Size:

86600 sq. km total (Land area: 86100 sq. km Water area: 500 sq.km)

Population:

8,177,717 (July 2008 est.)

Languages:

Azerbaijani (Azeri) 90.3%, Lezgi 2.2%, Russian 1.8%, Armenian 1.5%, other 3.3%, unspecified 1% (1999 census)

Government:

republic

Capital city:

Baku

Legal system:

based on civil law system; has not accepted compulsory ICJ jurisdiction

Currency:

Azerbaijani manat (AZN)

Licensing:

Country profile

Bordering the Caspian Sea Azerbaijan is capitalizing upon the Sea's sizeable, but still mostly untapped, hydrocarbon resources. Azerbaijan's real gross domestic product (GDP) grew by an impressive 31 percent in 2006, driven by growth in oil production and the beginning of natural gas production. In the next couple years favorable real GDP growth is expected, but maintaining low inflation rates as energy and transit revenues flow into the country represents a major challenge. Azerbaijan's hope for sustained economic growth rests in large part with its management of sizeable oil and natural gas resources in the Caspian Sea region, through effective management of the resulting revenue stream, and non-oil sector diversification.

After the first commercial oil flows through the Baku-T’bilisi-Ceyhan pipeline (BTC) during summer 2006 and the increasing oil production from the Azeri-Chirag-Guneshli (ACG) project, oil revenues are expected to contribute to a doubling of Azerbaijan’s GDP by 2008. Although the oil sector represented around 10 percent of Azerbaijan’s GDP in 2005, it is already projected to double to almost 20% of GDP in 2007. To manage the revenues, former president President Heydar Aliyev created a State Oil Fund in 1999, which is designed to use money obtained from oil-related foreign investment for education, poverty reduction, and efforts aimed at raising rural living standards. As of the end of 2006, the State Oil Fund reported assets of almost $2 billion, but the fund’s assets are expected to increase exponentially to $36 billion by 2010. See a recent paper in Geopolitics of Energyfor more information on the effects of energy revenues on Azerbaijan.

Energy production and consumption

Oil

Gas

Production:

934,700 bbl/day (2007 est.)

6 billion cu m (2007 est.)

Consumption:

160,000 bbl/day (2007 est.)

9 billion cu m (2007 est.)

Exports:

795,600 bbl/day (2007 est.)

Imports:

3,924 bbl/day (2004)

4 billion cu m (2005)

Reserves:

7 billion bbl (17 April 2007 est.)

849 billion cu m (17 April 2007 est.)

Major fields:

Azerbaijan - recent news

21 Mar 25	Azerbaijan/Türkiye: Apollo to partner with bp on TANAP gas pipeline Apollo Funds invest ~$1 billion for non-controlling shareholding in BP Pipelines (TANAP), which holds bp’s 12% interest in the Trans-Anatolian natural gas pipeline (TANAP), part of the Southern Gas Corridor (SGC) pipeline system.
18 Nov 24	Azerbaijan: Innovative Baker Hughes emissions abatement solution chosen to reduce routine flaring at SOCAR’s Baku Oil Refinery Baker Hughes and SOCAR have announced the signing of a contract for an integrated gas recovery and hydrogen sulfide (H2S) removal system that will significantly reduce downstream flaring at SOCAR’s Heydar Aliyev Oil Refinery in Baku, Azerbaijan. The contract was signed at COP29 in Baku.
14 Nov 24	Azerbaijan: Masdar, SOCAR Green and ACWA Power sign MoU to explore the development of 3.5GW of offshore wind projects in Azerbaijan Abu Dhabi Future Energy Company PJSC – Masdar, the UAE’s clean energy powerhouse, has signed a Memorandum of Understanding with SOCAR Green, a wholly-owned subsidiary of SOCAR dedicated to sustainable projects, and Saudi-listed ACWA Power, the world’s largest private water desalination company, leader in energy transition and first mover into green hydrogen, to develop 3.5 gigawatts (GW) of offshore wind projects in the Azerbaijan section of the Caspian Sea.
24 Sep 24	Azerbaijan: MOL Group and its JV partners sign commercial agreements for the development of gas reserves at the ACG field MOL Group and its Joint Venture partners signed commercial agreements for the development of gas reserves in Azerbaijan. After SOCAR and BP, MOL is the third largest shareholder in the giant ACG field, where non-associated gas reservoirs were identified beneath and above the producing oil reservoirs.
16 Sep 24	Apollo partners with bp in Trans Adriatic Pipeline Apollo Funds to become a non-controlling shareholder in bp Pipelines TAP Limited, an entity which holds a 20% stake in Trans Adriatic Pipeline AG. Provides Apollo exposure to a world-class energy asset; allows bp to unlock near-term value and capital for efficient reallocation.