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AzerNEWS Staff

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Azerbaijan has gained a strategic advantage through investments in critical oil and gas infrastructure that enables energy exports from the Caspian Sea to international markets, according to an analytical review by Wood Mackenzie.

Although Azerbaijan is a major global oil and gas producer, its investment in export infrastructure is particularly significant because the Caspian Sea is landlocked, the international consultancy and research firm said.

Azerbaijan’s hydrocarbon industry has a history spanning more than a century, but it gained global significance in the early 2000s as BP began developing the giant offshore Azeri-Chirag-Gunashli (ACG) and Shah Deniz fields.

According to Wood Mackenzie, development of these fields helped Azerbaijan’s total hydrocarbon production reach 1.2 million barrels of oil equivalent per day by 2010, with oil accounting for around 80% of the total. Production has remained broadly stable since then, and the company expects this level to be maintained until the late 2030s, particularly through the second phase of TotalEnergies’ Absheron gas-condensate field development. A final investment decision for the project was made last month.

“Gas has been the main driver of growth in 2026, accounting for approximately 60% of total production,” the analysis said.

Wood Mackenzie analysts also highlighted the role of the State Oil Company of Azerbaijan (SOCAR) as one of the principal investors in the country’s hydrocarbon production projects.

The government is seeking to attract additional investment in both offshore and onshore developments. ExxonMobil has received a licence to explore a potentially large shale deposit whose resources have yet to be confirmed, according to the review.

Azerbaijan’s refining capacity is primarily geared towards meeting domestic fuel demand. Meanwhile, major export pipelines have enabled the development of the Southern Gas Corridor and expanded access for Azerbaijani energy resources to markets beyond the Caspian region.

Commissioned in 2005, the Baku-Tbilisi-Ceyhan (BTC) oil pipeline has a daily capacity of 1.2 million barrels and primarily transports Azerbaijani crude to the Mediterranean port of Ceyhan in Türkiye. Even with additional oil volumes transported from Turkmenistan and Kazakhstan across the Caspian Sea, utilisation of the pipeline’s capacity remains significantly below its potential, Wood Mackenzie noted.

The Trans-Anatolian Natural Gas Pipeline (TANAP), commissioned in 2018, and the Trans Adriatic Pipeline (TAP), which began operating in 2020, transport Azerbaijani gas through Georgia and Türkiye before connecting it to European gas networks via Greece and Italy.

According to Azerbaijan’s State Statistics Committee, the country produced 17.692 million tonnes of crude oil, including gas condensate, in January–August 2026. Marketable crude oil accounted for 17.648 million tonnes.

During the first eight months of 2026, Azerbaijan exported 14.678 million tonnes of crude oil and petroleum products obtained from bituminous minerals, valued at $9.282 billion, according to the State Customs Committee.

Natural gas production reached 33.4 billion cubic metres over the same period. Exports of natural gas in gaseous form totalled 16.37 billion cubic metres, with a value of $5.7 billion, according to official statistics.