SOCAR sums up its activity, unveils plans for 2020 (Interview)

Over the period of last nine years and 11 months, about 420 million tons of oil and 287.5 billion cubic meters of gas were produced in Azerbaijan, Ibrahim Ahmadov, Deputy Head of Public Relations and Events Department at Azerbaijan’s state oil company SOCAR, said in an interview with Trend.

Ahmadov noted that oil production in Azerbaijan reached its peak amounting to 50.8 million tons, in 2010.

“This was due to the fact that production at the block of Azeri-Chirag-Guneshli fields reached the maximum level in history,” the SOCAR representative said.

Ahmadov noted that a relatively controlled decline has been observed in Azerbaijan in terms of oil production since the peak in the country’s oil production.

“We see a significant increase in gas production,” Ahmadov said. “An increase in gas production is also expected in the future, against the background of a relative natural decline in oil production.”

The decline in oil production is due to the fact that oil fields are aging, the SOCAR representative noted, adding that new fields that are currently being developed are mainly gas condensate fields, such as the Shahdeniz field.

SOCAR activity results in 2019

Some 34 million tons of oil were extracted in Azerbaijan during 11 months of 2019, Ahmadov said.

“Seven million tons of oil out of this volume accounts for SOCAR’s share,” the deputy head added.

“About 32 billion cubic meters of gas were extracted in Azerbaijan during 11 months of 2018, of which about 6.2 billion cubic meters of gas accounted for SOCAR,” Ahmadov added.

“The specified volume of gas includes indicators of consumer and producer gas, which is again pumped into the reservoirs,” the deputy head said.

“In general, gas production increased by 16 percent in Azerbaijan during 11 months of 2019,” the deputy head said. “As for the oil production, it is worth noting a controlled decline in production by three percent compared to last year. This indicator is associated with a decrease in natural production rates on the Azeri-Chirag-Gunashli (ACG) block of fields.”

Deals signed by SOCAR in 2019

SOCAR entered into about 400 spot agreements in 2019, Ahmadov noted, adding that the bulk of contracts for the supply of oil and gas were concluded on a short-term basis.

“Last year, SOCAR signed an agreement with Vietnamese Binh Son Refining and Petrochemical JSC state oil refining and petrochemical company to purchase five million barrels of Azeri Light oil [about 700 million tons] in the first half of 2020,” the deputy head of SOCAR’s department said.

Ahmadov added that in 2019, SOCAR signed a one-year agreement with India’s Indian Oil Corporation and Bharat Petroleum company for the supply of oil in the amount of one million barrels per month.

In 2020, when the agreement expires, there is likelihood that it will be extended, Ahmadov added.

Gas filling stations built by SOCAR in 2019

The number of SOCAR gas stations in Azerbaijan reached 30 in 2019, Ahmadov said.

The deputy head noted that another gas station will soon appear in Georgia, and the total number of gas stations operating under the SOCAR brand in Georgia will reach 115.

“In Romania, the number of SOCAR gas stations in 2019 amounted to 43, with two new stations added, while in Ukraine this figure reached 62, with one new gas station added,” Ahmadov said.

The deputy head added that there are a total of 266 gas stations in Austria and Switzerland (six new gas stations were added in 2019) operating under the SOCAR brand.

“Most of them are our property, but some of them are franchised, not being the direct property of SOCAR,” Ahmadov added.

He also noted that SOCAR operates compressed natural gas (CNG) filling stations in Azerbaijan.

SOCAR activity results on Absheron field

In 2019, completion of drilling of the main well at the Absheron field in the Azerbaijani sector of the Caspian Sea, which will later be used for gas extraction at this field, became an important result as part of cooperation of Azerbaijan’s state oil company SOCAR with the French Total company, Ahmadov said.

The deputy head noted that the well consisted of two shafts, the first of which was designed for assessment of the potential of the Absheron field.

“The depth of this shaft is 7,411 meters,” Ahmadov reminded. “Our semi-submersible drilling rig named after Heydar Aliyev was used for the drilling works.”

The deputy head added that this well became the deepest well in the Caspian Sea.

“The depth of the second shaft is 6,800 meters,” said Ahmadov. “The drilling was finally completed in October 2019.”

The deputy head noted that SOCAR is preparing for the start of gas and gas condensate extraction at the Absheron field.

“The first product is planned to be received in 2021, when the construction of infrastructure, communications, a platform and a transshipment point at the Oil Rocks is completed,” Ahmadov said. “The product will be transported along a pipe using a pipe-in-pipe technology to the transshipment point at the Oil Rocks, and then on land to the terminal.”

SOCAR activity results on Karabakh field

After appraisal drilling at the Karabakh field, the Dede Gorgud semi-submersible floating drilling rig will be sent to the prospective Aypara structure, where it will be drilling an appraisal well for two months, Ahmadov said.

Ahmadov reminded that recently, Dede Gorgud semi-submersible floating drilling rig has been delivered to the Karabakh field, where appraisal drilling will last about two months.

“The purpose is to identify the potential of the field, as well as the reserves of oil and gas,” Ahmadov said.

Ahmadov added that according to preliminary data, the Karabakh field may have more oil reserves than gas.

“A platform can be installed at the field for both oil and gas extraction,” the deputy head said. “By 2021, it is planned to extract the products from this platform.”

Regarding the development of other promising fields, Ahmadov noted that seismic surveys were carried out in the last months of 2019 in the territory of the Ashrafi-Dan Ulduzu-Aypara (ADUA) block of fields.

“Since the Ashrafi and Dan Ulduzu fields are closer to the Karabakh field and Aypara is located a little farther, a separate approach is required to this structure,” the SOCAR representative added.

Ahmadov said that 2D and 3D drilling was carried out, the work is nearing a wrap up, and data collection and interpretation will begin in the coming months.

SOCAR reveals investments’ volume in Petkim petrochemical complex

In 2019, about $120 million were invested in the Petkim petrochemical complex located in Turkey, Ahmadov noted.

The deputy head added that in past years, the volume of investment was approximately similar.

“In order to modernize and improve production efficiency, Petkim launched a special program called ‘Petkim Benim’,” Ahmadov noted. “It provides for more intensive participation of the employees in management, encouraging them to submit proposals to increase the efficiency of operations by the complex.”

The deputy head noted that the proposals by the employees were analyzed and the most optimal in terms of the implementation of proposal were selected.

“As a result, out of the total amount of the investments, about $5 million were made based on these proposals,” Ahmadov said. “The investments positively affected the work of our complex and brought additional income.”

In conclusion, the deputy head added that this program still continues.

Results of SOCAR modernization projects in 2019

SOCAR is simultaneously carrying out two modernization projects – the modernization of the Heydar Aliyev Oil Refinery and the Ethylene-Polyethylene plant of the Azerikimya Production Union in Sumgait city, Ahmadov said.

The deputy head noted that the enterprises are connected, as the Heydar Aliyev Refinery supplies Azerikimya with production materials.

“The scope of modernization work at the Heydar Aliyev Refinery includes building a new unit, as well as replacing almost all existing units with completely new ones. As a result, we will have a practically new facility,” Ahmadov said.

Ahmadov added that in 2021-2022, it will be possible to produce diesel fuel according to the EURO-5 standard.

“Fuel quality will be significantly improved, atmospheric emissions will be reduced, and thereby the environmental situation in the country will improve,” the head of the SOCAR department said.

Higher production volumes at the Heydar Aliyev Oil Refinery can be achieved in 2025, when the modernization project of the refinery is completed, Ahmadov added.

The deputy head said that the refinery will be able to process up to 7.5 million tons of oil instead of the current capacity six million tons.

“A new bitumen plant and a terminal for the transportation of liquefied natural gas (LNG) were commissioned in October 2018. This was the completion of the first phase of the refinery’s modernization,” Ahmadov said adding that the second and third phases envisage the production of diesel according to the EURO-5 standard.

“In general, the modernization project of the Heydar Aliyev Refinery is divided into two packages. The first envisages the construction of new units, while the second is about the repair and modernization of existing ones,” Ahmadov said.

The deputy head of public relations and events department added that according to preliminary data for 2019, overall progress in the first work package of the refinery’s modernization is over 60 percent.

“By the end of November 2019, concrete structures totaling 45,000 cubic meters and metal structures weighing more than 7,000 tons were built, and about 3,302 meters of aboveground pipes were welded,” Ahmadov noted.

The deputy head said that the overall progress on the second work package of the refinery’s modernization is completed by 12 percent to date.

In the second quarter of 2020, there are plans to complete all work related to the modernization of the ethylene-polyethylene plant of the Azerikimya Production Union of SOCAR, Ahmadov noted.

The deputy head said that the objective of the modernization project is to increase production volume from 60,000 to 175,000 tons – almost three times, to supply the SOCAR Polymer plants’ complex with raw materials on a permanent basis.

“The modernization project is being implemented by SOCAR-KBR LLC as a contractor, and Azfen and Ustal companies as subcontractors,” Ahmadov noted.

The deputy head added that a hydrogen purification unit was commissioned in 2019, new tanks for storing ethylene-propylene were installed, and a new office building was commissioned.

“A project is underway for construction of a new steam generation complex for electricity production,” said Ahmadov. “The project aims to increase the capacity of the steam generation complex to 65 megawatts per hour.”

In conclusion, the deputy head added that this project will be able to provide electricity not only to nearby facilities, but also to a part of Sumgait city.

SOCAR reveals key plans for 2020

For 2020, there are plans to complete the design of a new urea plant in Azerbaijan, the work on which began in 2019, Ahmadov noted.

The deputy head said that an engineering project will be prepared and presented to the company’s management, and then a decision will be made on the construction of the new plant in the Sumgait Chemical Industrial Park.

“It is also planned to complete modernization of the Ethylene-Polyethylene plant of the Azerikimya Production Union closer to the middle of 2020,” Ahmadov noted.

The deputy head added that the company’s plans also include making decision on investments related to the construction of an aromatic substances plant in Turkey, on the Aliaga Peninsula next to the Petkim petrochemical complex and the STAR oil refinery.

“The project will be implemented jointly with BP,” Ahmadov said. “In 2019, the primary engineering project was being prepared, and the investment decisions will be made in early 2020.”