Azerbaijan Oil and Gas Report Q1 2013
Business Monitor International, December 2012, Pages: 110
BMI View: Technical challenges and maintenance continued to drag down overall liquids production, with company data and official statistics continuing to report a decline in oil production. We forecast Azerbaijan's production to slightly decline from 2011 and reach 889,800b/d for 2012. Official statistics and company data suggest liquids output struggled on the back of technical challenges and maintenance, leaving volumes largely stagnant and well below 2010’s peak production. We are much more bullish on gas volumes, which we predict will rise to 18bcm in 2012 and continue to rise throughout our 10-year forecast period, arriving at 35.8bcm in 2021. Unlike our forecast for oil production, we see upside risks to our outlook for gas, supported by continued discoveries and prospects for additional volumes from currently scheduled projects such as Shah Deniz.
The key developments in Azerbaijan’s oil & gas sector are:
- In the wake of the row between Azerbaijan and UK major BP over faltering volumes from the key Azeri-Chirag-Guneshli (ACG) fields, we have further downgraded our forecast for oil production.
While we lowered our forecast for 2012 to 907,000 barrels per day (b/d) in our most recent review of Azeri oil production, recent developments and data have resulted in a further downgrade of oil production to 890,000b/d for 2012.
- Our data indicates that ACG accounts for nearly 80% of the country's total production, and after peaking at 823,000b/d in 2010, output has struggled in recent years. First oil from the Chirag Oil Project (COP), part of the ACG complex, should help to offset problems at other fields in the BP-led development as production ramps up from late 2014 onwards.
- We continue to expect production to peak in 2019 at a revised figure of 1.15mn b/d and gradually decline from that date onward. Worse than expected output from mature fields or the failure of volumes from COP or other projects to meet targets pose downside risk to our forecast, and bring forward the date or increase the rate of decline.
- ONGC’s acquisition of Hess’s stake at the ACG fields, is set to be finalised in 2013, which adds another cash rich foreign player to Azerbaijan's upstream sector.
- Continued progress on developments at Shad Deniz II (SDII), the country’s leading gas project that should see 10bn cubic metres (bcm) to Europe and 6bcm to Turkey by 2018, continues its steady advance. The Shah Denis Consortium (SDC) has narrowed its pipeline options to Nabucco West and Trans Adriatic Pipeline (TAP), with the backers of each of the pipelines completing financing agreements.
- We maintain a bullish outlook for gas production in Azerbaijan, with continued discoveries holding the potential of an upward revision as the country moves forward with outlining plans to develop recent gas finds.
Azerbaijan’s dependence on energy prices leads to high volatility in the country’s export revenues. However,
continued demand from emerging markets and persistent efforts from Europe to secure access to gas from the Caspian ensure there will be no shortage of demand for Azeri resources. Although the oil market has moved away from the cycle of tight supply we saw in 2011 and Q112, we have now arrived at marked by volatile demand and ample supply. With supply now comfortably meeting demand, we believe OPEC basket oil prices will hold steady from an estimated US$107.52 per barrel (bbl) in 2011 to US$107.05/bbl in 2012, creating upside risk for the Azeri macroeconomic outlook.
BMI Industry View 7
SWOT Analysis 9
Azerbaijan Oil And Gas SWOT 9
Industry Forecast Scenario 10
Oil And Gas Reserves 10
Table: Azerbaijan Proven Oil And Gas Reserves And Total Petroleum Data, 2010-2016 10
Table: Azerbaijan Proven Oil And Gas Reserves And Total Petroleum Data, 2015-2021 11
Oil Supply And Demand 13
Table: Azerbaijan Oil Production, Consumption And Net Exports, 2010-2016 13
Table: Azerbaijan Oil Production, Consumption And Net Exports, 2015-2021 14
Gas Supply And Demand 17
Table: Azerbaijan Gas Production, Consumption And Net Exports, 2010-2016 17
Table: Azerbaijan Gas Production, Consumption And Net Exports, 2015-2021 19
LNG 24
Refining And Oil Products Trade 25
Table: Azerbaijan Refining – Production And Consumption, 2010-2016 25
Table: Azerbaijan Refining – Production And Consumption, 2015-2021 25
Revenues/Import Costs 26
Country Risk/Reward Ratings 28
Azerbaijan Upstream Ratings 28
Regional And Country Risk/Reward Ratings 29
Table: Central And Eastern Europe Risk/Reward Ratings 30
Table: Upstream Risk/Reward Rating 31
Table: CEE Downstream Risk/Reward Ratings 34
Azerbaijan Energy Market Overview 38
Overview/State Role 40
Licensing And Regulation 40
Government Policy 40
Licensing Rounds 40
International Energy Relations 41
Table: Upstream Projects Database 45
Oil And Gas Infrastructure 46
Oil Refineries 46
Table: Downstream Projects 46
Table: Refineries In Azerbaijan 46
Service Stations 48
Oil Storage Facilities 48
Oil Terminals/Ports 49
Oil Pipelines 49
Gas Pipelines 50
Table: Rival Gas Pipeline Projects 52
LNG 53
Competitive Landscape 55
Executive Summary 55
Table: Key Domestic And Foreign Companies 56
Table: Key Upstream Players 57
Table: Key Downstream Players 57
Company Monitor 58
Socar 58
BP Azerbaijan 63
Statoil 67
Lukoil Azerbaijan 69
Azpetrol 71
ExxonMobil – Summary 73
Eni – Summary 73
Inpex – Summary 73
Chevron – Summary 73
Itochu/Delta Hess – Summary 74
TPAO – Summary 74
Total – Summary 74
ONGC Videsh Ltd (OVL) – Summary 75
Korea National Oil Corporation (KNOC) – Summary 76
GdF Suez – Summary 76
RWE Dea – Summary 76
Others – Summary 77
Regional Energy Market Outlook 78
Global Market Overview 87
Table: Global Oil Demand Forecasts – A Comparison 89
Central And Eastern Europe – Regional Appendix 93
Table: Oil Consumption – Historical Data & Forecasts, 2009-2016 (’000b/d) 93
Table: Oil Consumption – Long-Term Forecasts, 2014-2021 (’000b/d) 94
Table: Oil Production – Historical Data & Forecasts, 2009-2016 (’000b/d) 94
Table: Oil Production – Long-Term Forecasts, 2014-2021 (’000b/d) 95
Table: Refining Capacity – Historical Data & Forecasts, 2009-2016 (’000b/d) 96
Table: Refining Capacity – Long-Term Forecasts, 2014-2021 (’000b/d) 96
Table: Gas Consumption – Historical Data & Forecasts, 2009-2016 (bcm) 97
Table: Gas Consumption – Long-Term Forecasts, 2014-2021 (bcm) 98
Table: Gas Production – Historical Data & Forecasts, 2009-2016 (bcm) 98
Table: Gas Production – Long-Term Forecasts, 2014-2021 (bcm) 99
Table: LNG Exports – Historical Data & Forecasts, 2009-2016 (bcm) 00
Table: Net LNG Exports – Long-Term Forecasts, 2014-2021 (bcm) 00
Methodology And Risks To Forecasts 101
Glossary Of Terms 102
Table: Glossary of Terms 02
Oil And Gas Risk/Reward Ratings Methodology 104
Ratings Overview 04
Table: BMI’s Oil & Gas Business Environment Ratings – Structure 05
Indicators 05
Table: BMI’s Oil & Gas Upstream Ratings – Methodology 05
Table: BMI’s Oil & Gas Business Environment Downstream Ratings – Methodology 06
BMI Methodology 108
How We Generate Our Industry Forecasts 08
Energy Industry 08
Cross checks 09
Sources 09
Company Monitor
Socar
BP Azerbaijan
Statoil
Lukoil Azerbaijan
Azpetrol
ExxonMobil – Summary
Eni – Summary
Inpex – Summary
Chevron – Summary
Itochu/Delta Hess – Summary
TPAO – Summary
Total – Summary
ONGC Videsh Ltd (OVL) – Summary
Korea National Oil Corporation (KNOC) – Summary
GdF Suez – Summary
RWE Dea – Summary
Others – Summary
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