Source: AFP
Azerbaijan, which is holding snap parliamentary elections on Sunday, is a country in the Caucasus region with a historical connection to hydrocarbons, which account for most of its revenue.
An ancient story
In the late 13th century, the Venetian merchant, explorer and writer Marco Polo reported seeing a gushing “fountain of oil” as he traveled along the Silk Road in the Caucasus.
The name Azerbaijan comes from the Persian “azer”, or “sacred fire”, from the temples of the ancient religion of Zoroastrianism, which were fueled by natural gas or crude oil that gushed naturally from the ground.
Today, near the capital Baku, the Ateshgah Zoroastrian temple has a perpetually burning fire fed by a methane gas pipe from a nearby field. In the past, gas escaped through cracks in the ground.
Cradle of oil extraction
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The country is historically one of the cradles of modern oil extraction: even before drilling began in the United States, a well was opened in 1846 near Baku, which was quickly surrounded by rocks.
The Swedes Robert and Ludwig Nobel, brothers of Albert, after whom the famous Nobel Prizes are named, were among the first to invest in Azeri oil.
They bought a refinery and oil fields from 1876, then founded the Branobel company which became the largest in the world before it was nationalized in 1920 when Azerbaijan came under Soviet control.
By 1900, it was estimated that more than half of the world’s oil production came from the Absheron Peninsula in the Caspian Sea in the Baku region.
An oil-gas republic
The republic of Azerbaijan, which became independent in 1991 after the collapse of the Soviet Union, derives most of its wealth from oil and natural gas, which today come mainly from offshore fields in the Caspian Sea.
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Hydrocarbons account for 90 percent of the country’s exports, half of government income and a third of gross domestic product, according to the International Energy Agency (IEA) and the US State Department.
The ILO ranks Azerbaijan as a “major” producer and exporter of natural gas and oil, with 32.7 million tons of crude and 35 billion cubic meters of natural gas produced in 2022, of which more than two-thirds were exported.
The country is among the 20 largest net exporters of oil and the 12th largest for natural gas, according to 2022 data.
The Azeri-Chirag-Guneshli (ACG) deepwater oil field complex, discovered in the 1970s about 100 kilometers (62 mi) east of Baku, is the country’s main source of oil.
The site, operated by Britain’s BP in partnership with state-owned Socar, accounts for more than half of the country’s crude oil production, according to BP’s operating figures for the first quarter of 2024.
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The bet on natural gas
While Azerbaijan’s oil production has been in decline since peaking in 2010, natural gas production is increasing.
A member of OPEC+, an expanded version of the Organization of the Petroleum Exporting Countries, it champions natural gas as a transition energy as nations seek to cut carbon emissions and plans to increase its output by 35 percent by 2034.
Baku hopes to take advantage of falling Russian gas exports, hit by international sanctions after the war in Ukraine, to become a preferred supplier to Europe via the South Gas Corridor network of pipelines that run through Georgia and Turkey, connecting the Azerbaijan with Italy.
The main gas field, Shah Deniz, was discovered in 1999 in the Caspian Sea about 70 kilometers (43 mi) south of Baku and is one of the largest natural gas sites in the world.
Operated by BP, it provides more than two-thirds of national production, according to BP’s operating figures for the first quarter of 2024.
Source: AFP
