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Nazrin Abdul

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Azerbaijan, located on the western shore of the Caspian Sea, has long been defined by its abundant natural resources and its pivotal role in shaping the global oil and gas industry. From hosting the world’s first industrial oil well to pioneering offshore engineering, the country’s history is marked by innovation and resilience. Yet today, as the world questions the sustainability of hydrocarbons and accelerates the shift toward cleaner energy, Azerbaijan and the broader Caspian region face a critical crossroads. For policymakers and industry leaders, the question is no longer whether the energy transition will occur, but how the region can navigate it while maintaining its strategic relevance and economic strength.

Against this backdrop, Baku hosted the 2025 Caspian Technical Conference (CTC), organized by the Society of Petroleum Engineers (SPE), which brings together 132,000 specialists from 146 countries. Supported by SOCAR and themed “Learning from the Past, Innovating Today, Inspiring the Future,” the conference underscored how the region must use its historical experience to respond to modern challenges. Over two days, experts examined issues ranging from digitalization, AI-driven reservoir optimization and drilling efficiency to decarbonization, operational excellence and workforce transformation—all of which form the backbone of the Caspian’s evolving energy landscape. Alongside the sessions, a technology exhibition showcased tools and innovations that could redefine the next decades of extraction and infrastructure management.

The core message emerging from the discussions is that hydrocarbons remain indispensable, yet the methods of extracting them must change. Azerbaijan’s flagship Azeri–Chirag–Gunashli (ACG) field illustrates this challenge clearly: once capable of wells producing 20–30 thousand barrels a day, current wells yield only 2–3 thousand as geological conditions grow more complex. bp’s Regional President for Azerbaijan, Georgia and Türkiye, Giovanni Cristofoli, warned that leaving 60–80% of remaining resources underground is neither economically nor strategically tolerable, and emphasized that only advanced technology—horizontal drilling, robotics, digital twins, precision pressure management—can sustain production in such mature reservoirs. His remarks align with S&P Global Ratings’ recent findings that SOCAR’s hydrocarbon output is expected to gradually decline under its current operational model unless modernization accelerates.

At the same time, global investor behavior has shifted dramatically. As BCG Azerbaijan’s Managing Director Vladimir Rogov noted, major energy companies are prioritizing shareholder returns over reinvestment, raising hurdle rates and demanding quicker, higher-value outcomes. This places pressure on regional projects, especially as Caspian CAPEX has fallen by nearly 50% compared to the previous decade after large-scale projects in Azerbaijan and Kazakhstan moved into production phases. Yet irony lies in the fact that the Caspian still holds immense potential: while the region accounts for only 2% of global oil reserves, it holds nearly 10% of global gas reserves and remains a critical bridge between Europe and Asia. Rogov stressed that the basin is still underexplored due to historically low geological spending, and that new surveys, MoUs and renewed exploration activity are beginning to reveal fresh prospects. Enhanced Oil Recovery (EOR), widely used elsewhere, remains underutilized in the Caspian, representing one of the most immediate opportunities for boosting output from aging assets.

SOCAR Vice President Babek Huseynov echoed the sentiment that the region is undergoing a fundamental turning point. Reflecting on the Caspian’s long industrial legacy, he emphasized that many Azerbaijani fields have been producing for decades yet remain essential for energy security and regional stability. Maintaining their productivity now requires not only new technology but new ideas, skills and approaches. Huseynov highlighted SOCAR’s commitment to revitalizing mature fields—citing the “Bahar” field as an example, once considered exhausted with a recovery rate below 10%, but now recognized to hold considerable untapped potential thanks to updated geological assessments. He stressed that digital tools, automation, artificial intelligence and advanced recovery techniques are increasingly central to SOCAR’s strategy, while investment in the next generation of engineers is becoming equally critical as earlier generations retire.

The energy transition is both inevitable and complex. bp’s Energy Outlook indicates that global energy demand in 2050 will be roughly 10% higher than today, and even under a scenario limiting global warming to below 2°C, oil and gas will still supply around one-third of global energy needs. This reality positions Azerbaijan not only as a region in transition but as a region that will remain vital to global energy security for decades. The Caspian’s challenge is therefore not about choosing between hydrocarbons and renewables, but about modernizing hydrocarbon production while gradually integrating low-carbon solutions, enabling the region to remain competitive in a world that demands cleaner, more efficient resources.

Ultimately, the future of Caspian energy will depend less on the volume of remaining resources and more on the region’s ability to adapt. Success will require innovation-driven extraction, increased investor confidence, revitalization of mature fields, strategic workforce development and a willingness to blend historical experience with modern technology. Azerbaijan’s past has secured its place on the world energy map; its future will depend on how boldly it reinvents itself for a new energy era.