Azerbaijan Prioritises Oil over Gas
Azerbaijan prioritised re-injecting gas into oil fields, over producing and exporting its gas, during 1Q 2018 as world oil prices firmed strongly in recent months, with Brent having risen to well over $70/b.
The country’s 1Q18 gross gas production increased by 5.2% year on year to 7.3bn m3. But the sales gas volume – included in the above figure - stayed unchanged at 4.794bn m3, showing that more gas was being re-injected into oilfields to maintain their output.
According to the initial plan, Azerbaijan’s oil production should have decreased in 2018 because of the natural decline in pressure at major old oil fields, including Azeri-Chirag-Guneshli (ACG) field.
Instead the country stepped up oil production by 2.4% to 9.7mn metric tons in 1Q2018. Higher world oil prices encouraged Azerbaijan to focus on gas re-injection and boosting oil output, even at the cost of having less gas for export and even importing some.
The country’s gas export decreased by 5% to 2.488bn m3 in 1Q18, of which a third went to Georgia and the remained volume to Turkey.
Socar told NGW that the country also imported 937.4mn m3 gas in 1Q2018, almost triple its imports in 1Q2017. Azerbaijan started Turkmen gas imports in October 2016 and Russian gas since November 2017.
Dashgin Iskandarov the director general of state-run Socar’s upstream subsidiary Azneft told NGW that Socar’s gas production increased by 8% to 1.4bn m3 in 1Q2018, while its oil also rose 5% to 1.5mn mt.
He said that drilling new wells and maintaining oil wells increased by 33% and 2.4 times during last year to 15 and 29 wells respectively. For the current year, producing 5.6bn m3 gas and 6.3mn mt oil from Aznet’s fields is projected, which each is about 2% more than the initial plan.
Azerbaijan plans to increase at Kalmaz and Karabagh underground gas storage facilities by 0.5bn m3 and 1bn m3 respectively, he added, to increase their capacity to the final level of 5bn m3 in total.