Azerbaijan - Oil and GasAzerbaijan - Oil and Gas
Since the mid 1990’s the oil and gas sector has been the engine driving Azerbaijan’s economy. Through a series of production sharing agreements (PSAs), Azerbaijan succeeded in attracting significant foreign direct investment from international energy companies. This investment led to a rapid increase in production, enriching the country and creating opportunities for U.S. businesses. Low world oil prices in recent years have strongly affected Azerbaijan’s economy and export receipts, but oil and gas still represents the largest share of its economy and contributions to the state budget.
Azerbaijan is the beginning of a key East-West energy corridor that is in the process of expansion. The Baku-Tbilisi-Ceyhan (BTC) oil pipeline stretches from Baku in Azerbaijan, through Tbilisi, Georgia, to a terminus at Ceyhan in Turkey. The South Caucasus Gas Pipeline (SCP) roughly parallels the BTC route, but ends in Erzurum, Turkey. Work is underway on expanding the SCP and building two new gas pipelines that will take gas from the second stage of the Shah Deniz offshore project across Turkey (via the Trans-Anatolian Pipeline, or TANAP) and then across Albania and Greece to Italy (via the Trans-Adriatic Pipeline, or TAP). Although many major contracts have been awarded, the development of the Shah Deniz II project and the pipeline projects are likely to present opportunities for U.S. firms.
In the longer term, the establishment of a route to gas markets in Europe is likely to spur development of additional gas fields in the Caspian, which would present a wide range of additional opportunities for U.S. companies.
Sub-Sector Best Prospects
Due to extensive onshore and offshore development, this sector remains the country’s largest sector in terms of revenue generated as a percentage of GDP. Opportunities include most types of equipment related to the exploration, extraction, and transportation of oil and gas. Project management and engineering services, petroleum products, drilling and oilfield equipment as well as abatement and environmental services also hold potential for U.S. firms in this area.
The oil and gas sector is expected to remain the most lucrative market for foreign businesses for years to come. In addition to oil and gas field development and transportation routes, Azerbaijan is planning a new oil and gas processing complex.
State Oil Company of Azerbaijan: http://www.socar.az/
Ministry of Energy of Azerbaijan: http://www.minenergy.gov.az/
BP Caspian: http://www.bp.com/caspian/
Caspian World: http://www.caspianworld.com/
U. S. Energy Information Administration: http://www.eia.gov/
State Statistics Committee of Azerbaijan: http://www.stat.gov.az/
State Oil Fund of Azerbaijan: http://www.oilfund.az/
Azerbaijan Energy Trade Development and Promotion