Azerbaijan Focuses on Oil, Reinjects Gas
Azeri gas sales have declined so far this year as the country focuses on oilfield reinjection. It has chosen to inject more gas into oil fields, in order to maintain oil production, even at the cost of higher gas imports from Turkmenistan and Russia.
Azerbaijan’s sales gas declined by 9.4% year on year to about 2.91bn m3 during January-February 2018, despite a 0.8% rise in gross gas production to 4.727bn m3, according to the country’s monthly statistics. That contrasts with Baku’s annual plan for 2018 which had aimed for 6.6% growth in gas production, plus increased exports.
Azeri sales gas production began to decline in 2016, after it focused on oil field re-injection. This enabled it to maintain oil production at 38.689mn metric tons in 2017, after five consecutive years of decline. Oil production in Azerbaijan in January-February 2018 is up 0.5% year on year at 6.373mn mt. The 2018 budget forecast oil production at 37.535mn mt this year but, with further gas re-injection, that forecast may be exceeded – at a time of higher oil prices.
In contrast, Azerbaijan imported 2.11bn m3 from Turkmenistan and Russia in 2017, which was as much as seven times higher than its 2016 figure.
Azerbaijan’s peak for sales gas production, since it split off from the Soviet Union in 1991, was 19.236bn m3/yr in 2015, 6% more than its 2017 figure. Sales gas production may trend upwards though later this decade, as Shah Deniz phase 2 production is scheduled to start initial production in 2H2018 and then increase gradually ramp up to 16bn m3/yr by 2021.