SOCAR turns into driving force behind energy evolution & global stability [ANALYSIS]

The State Oil Company of the Republic of Azerbaijan (SOCAR) has been a pivotal force in the socio-economic development of Azerbaijan, undergoing significant growth since its inception. Under the strategic direction of National Leader Heydar Aliyev, SOCAR's oil strategy, initiated in 1994, has driven transformative changes within the company and facilitated Azerbaijan’s integration into the global economy. This strategy has also attracted considerable foreign investment, solidifying SOCAR’s role as a major player in the international energy market.

The "Contract of the Century," signed with leading international oil companies to develop hydrocarbon deposits in the Azerbaijani sector of the Caspian Sea, marked a new era in the nation's oil and gas industry. Today, SOCAR has evolved from a company focused on oil and gas production, transportation, and processing into a major transnational corporation. It effectively represents Azerbaijan in international projects, contributing significantly to the country’s economic strength, socio-economic development, and the realization of national interests.

SOCAR stands as the largest and most dynamic energy company in the region, leading both Azerbaijan and Georgia, and ranking among the top three holdings in Turkiye.

In the second quarter of 2024, SOCAR achieved a notable drilling milestone, completing 21,600 meters of drilling—an increase of 14.7% compared to the same period the previous year.

The company produced 1.9 million tons of oil and 1.8 billion cubic meters of gas from fields operated independently or in partnership as the main shareholder. Gas production in Azerbaijan grew by approximately 5.2% year-over-year, reaching 12.5 billion cubic meters in the second quarter. Overall, 7.2 million tons of crude oil were extracted in Azerbaijan during this period.

SOCAR's oil exports totaled around 4.2 million tons, encompassing both oil produced directly by SOCAR and its share of production from international consortia in Azerbaijan. The company also saw a 9.2% increase in natural gas exports, reaching 6.2 billion cubic meters. Domestic natural gas consumption during the reporting period was 2.3 billion cubic meters.

In processing, SOCAR handled over 1.5 million tons of oil and more than 862 million cubic meters of gas in the second quarter. Gas processing volumes increased by 0.6% compared to the same period in 2023. Additionally, SOCAR exported over 659,000 tons of oil, petrochemical, and gas-chemical products from its Azerbaijani facilities, marking an 8% rise in exports compared to the previous year.

SOCAR's robust oil and gas export activities reinforce its position in the international energy markets, contributing significantly to global energy security. The company remains committed to expanding its export opportunities and enhancing its role in the global energy sector.

SOCAR's global energy relationships

European Countries: SOCAR enhances Europe's energy security by exporting natural gas through the Southern Gas Corridor. This project includes the Trans-Anatolian Pipeline (TANAP) and the Trans-Adriatic Pipeline (TAP), which transport Shah Deniz gas to European markets. SOCAR's role is crucial in diversifying Europe's energy sources and reducing reliance on single suppliers.

Turkiye: SOCAR is a major player in the Turkish energy market, exporting oil and gas from Azerbaijan. The company has significant investments in Turkiye, including the Petkim petrochemical complex and the STAR Refinery. These investments underscore SOCAR's commitment to the Turkish energy sector and its strategic importance in regional energy dynamics.

Georgia: SOCAR exports oil and gas to Georgia, a key transit country for Azerbaijani energy resources. Georgia's strategic location facilitates the transport of Azerbaijani oil and gas to various markets, reinforcing its role in the regional energy infrastructure.

Russia: SOCAR engages in oil and gas trade with Russia, primarily through established transit routes. This trade contributes to the overall energy flow between the countries and supports regional energy stability.

South Asian Countries: SOCAR, through its international partners, exports oil to South Asia. The company's activities in this region aim to expand its footprint in the global energy market and foster economic ties with South Asian countries.

Serbia: SOCAR's collaboration with Serbia is formalized through a "Memorandum of Understanding" and an "Agreement on the Sale of Gas" between SOCAR and Srbijagas. This cooperation enhances bilateral relations and promotes energy sector development between the two countries.

Kazakhstan: SOCAR and Kazakhstan maintain a robust partnership in the oil and oil products trade. Key aspects of this cooperation include the transportation of Kazakh crude oil through the Baku-Tbilisi-Ceyhan pipeline and processing operations in Azerbaijan. Since March 2023, SOCAR Midstream Operations LLC has been transporting 125,000 tons of oil per month from Kazakhstan's Tengiz field. Notably, the first shipments from Kazakhstan were loaded onto the "President Heydar Aliyev" and "Shusha" tankers in March 2023. The road map signed with KazMunayGaz in 2023 further enhances cooperation, positioning Azerbaijan as a pivotal regional energy hub.

Israel: SOCAR's engagement with Israel focuses on the exchange of expertise in exploration, production, and transportation of hydrocarbons. This collaboration is instrumental for Israel's oil and gas sector development, leveraging SOCAR's advanced technological and operational experience.

SOCAR's international partnerships and strategic investments illustrate its pivotal role in global energy markets and its commitment to strengthening energy ties with countries around the world.

Future energy projects

SOCAR has ambitious plans for the future of its energy operations, particularly with the development of new natural gas projects. Beginning in the first quarter of 2025, SOCAR will initiate natural gas production as part of the "Azeri-Chirag-Guneshli" (ACG) deep gas project. President Ilham Aliyev has emphasized the significance of this project, highlighting its large reserves and its role as a major source of Azerbaijan’s oil exports over the years.

President Aliyev stated, "The 'Azeri-Chirag-Guneshli' structure represents a promising asset with substantial reserves. We have long relied on ACG for our oil exports, and now, with our partners, we are preparing to explore its deep gas potential. Initial production is projected to be around half a billion cubic meters, with expectations to increase this volume 3-4 times in the coming years. This development, alongside production from the 'Shah Deniz' and 'Absheron' fields, will significantly boost our gas output. Additionally, we plan to advance the second phase of the 'Umid' gas-condensate field, which could yield 2-3 billion cubic meters of gas within 3-4 years. These projects are grounded in detailed analysis, financial resources, and agreements with investors, with some being executed in collaboration with partners and others by SOCAR independently."

SOCAR green energy projects

SOCAR is also making strides in the field of renewable energy through its subsidiary, "SOCAR Green". Established to promote green energy and decarbonization, SOCAR Green focuses on managing SOCAR’s strategic renewable energy projects and enhancing cooperation with international partners in this sector.

During the Baku Energy Week, SOCAR Green signed Shareholders' Agreements with the United Arab Emirates’ company "Masdar" for three major renewable energy projects in Azerbaijan. These agreements encompass the development of one wind and two solar power plants. This collaboration aims to diversify Azerbaijan’s energy sources, expand the use of alternative energy, and support the country’s transition to a low-carbon economy.

The signing of these agreements marks a significant step toward Azerbaijan’s energy transition goals. With the planned installation of three power stations totaling 1 GW in capacity, these projects will contribute to Azerbaijan's commitment to a greener future, aligning with its role as the host of COP29. The implementation of these projects is expected to save approximately 2.3 billion kWh of electricity annually and prevent about 1 million tons of carbon emissions per year. This aligns with Azerbaijan's green agenda and supports sustainable development efforts, significantly advancing the country's renewable energy goals.

SOCAR’s efforts in expanding its natural gas production and investing in renewable energy underscore its commitment to both meeting current energy demands and advancing global sustainability goals.

SOCAR’s trajectory from a national oil company to a major transnational corporation reflects its dynamic impact on both regional and global energy landscapes. With substantial investments and strategic partnerships spanning Europe, Turkiye, Georgia, Russia, South Asia, Serbia, Kazakhstan, and Israel, SOCAR continues to enhance its global footprint. Looking ahead, SOCAR is poised to further expand its influence through ambitious natural gas projects and green energy initiatives.

In conclusion SOCAR’s ongoing efforts will not only support Azerbaijan’s energy transition but also contribute significantly to the broader goals of sustainable development and energy diversification.