Azerbaijan's Second Oil Boom: forecasts and opportunities

The speeches of Azerbaijani President Ilham Aliyev at international venues are never ignored. They are actively commented on not only in our country, but also in foreign media. There was also a sensation in Davos. The Head of state's words about the future of Azerbaijan's oil industry attracted great attention from foreign observers. President Ilham Aliyev has actually announced another oil boom in the republic.

At the "Breakfast with the leadership of Azerbaijan" event organized by Euronews, President Ilham Aliyev stated that the country is currently increasing gas production and reducing oil production: "... but we have plans to stabilize oil production and even increase it. It may be too early to talk about it now, but we have well-founded hopes that we can experience a second very significant oil boom in Azerbaijan if exploration projects conducted by international energy companies produce good results. We hope so."

Currently, the situation with oil production in the country is as follows. According to the forecast of the International Energy Agency (IEA), in 2026, oil production in Azerbaijan will average 0.57 million barrels per day. By the end of 2025, the average daily oil production in Azerbaijan was at the same level, whereas in 2024 this figure was 0.6 million barrels per day.

According to media reports, in 2026, crude oil production at the Azeri-Chirag-Guneshli (ACG) fields is projected at 120.1 million barrels, which is 3 million barrels less than in 2025 and 2.5 times less than in peak 2010.

The alleged imminent completion of Azerbaijan's oil reserves has been talked about for years, but these rumors have no valid arguments. The facts suggest otherwise. The fields currently under development allow Azerbaijan to remain an oil exporter for at least two decades. According to experts, "big" oil can be replaced by "small" oil, but this will only prolong the oil era of Azerbaijan.

According to the international rating agency S&P Global Ratings, oil production in Azerbaijan (including gas condensate) will average 0.58 million barrels per day by 2027. The agency's analysts believe that production will stabilize in the coming years due to additional reserves.

If Azerbaijan's oil industry had no prospects, foreign partners would not be actively investing in new projects. For example, BP is studying the concept of developing the Karabakh field, as Bakhtiyar Aslanbeyli, the company's vice president for the Caspian region, told reporters earlier. According to him, the field is still being explored, its geological and geographical features are being studied, and the format for further development is being determined. Although the reserves of the Karabakh field are significantly less than those of the Azeri-Chirag-Guneshli block, this project, as Aslanbeyli noted, is considered a priority for BP.

It should be noted that the geological oil reserves of the Karabakh field are estimated at more than 60 million tons, recoverable - at 21 million tons of oil and 13 billion cubic meters of gas.

BP has a 35% stake in the projects of the Karabakh field development and the prospective Aipara-Dan Ulduzu-Ashrafi structure in the Azerbaijani sector of the Caspian Sea. In June last year, BP and SOCAR signed a corresponding agreement within the framework of the Baku Energy Week. The British company will act as the operator in both projects. BP plans to produce the first oil at Karabakh in 2029.

It should also be recalled that in April 2024, oil production began from the new Azeri Central East (ACE) platform, which is located between the existing Central Azeri and Eastern Azeri platforms. As reported, the platform, after commissioning 48 planned wells, is designed to produce up to 100,000 barrels of oil per day. It is predicted that 300 million barrels (48 million tons) will be produced on the platform over its entire life.

BP is not the only one of the oil and gas giants present at the Azerbaijani site. Last June, American ExxonMobil signed a memorandum of understanding with SOCAR in the field of exploration and production of hard-to-recover hydrocarbons onshore. Currently, onshore production accounts for only 5 percent of the country's total oil production.

The head of the Azerbaijan Petroleum Research Center, Ilham Shaban, noted that there are onshore deposits in Azerbaijan at Absheron, Shabran, Salyan and Neftchala. ExxonMobil is an American oil giant with advanced technologies. These technologies can be used for onshore exploration in the western part of the country, from Yevlakh and beyond. Current technologies, according to the expert, allow for more in-depth analyses. In 2025, SOCAR signed three memoranda in this area on work in the northern, western part of the country, as well as in the Gobustan-Shamakhi zone. In the latter, a Hungarian company will conduct exploration work.

As for oil reserves in general, as noted by Ilham Shaban, in the largest oil block of Azerbaijan, Azeri-Chirag-Guneshli, recoverable reserves amount to 1 billion tons. In 2025, 617 million tons were extracted from these volumes. If we consider that ACG currently produces more than 16 million tons of raw materials annually, then stable production can be carried out here at the current rate for more than 24 years.

"I would like to note that the contract development period for ACG is just ending on December 31, 2049. In addition, by 2030, BP is going to extract the first volumes of oil from the Karabakh field, discovered in 1998 but not developed due to certain circumstances. Azerbaijan has another oil field that is waiting in the wings. This is the Dostlug field bordering Turkmenistan. In January 2021, an intergovernmental agreement was reached on its joint development," Shaban said.

Our interlocutor stressed that when talking about the second oil boom in Azerbaijan, we are not talking about the short term, since the possible growth will depend on the results of ongoing or planned exploration work. President Ilham Aliyev has sent a positive signal to companies operating in the Azerbaijani market. The signal is that we will be able to increase oil production, the head of the Central Research Institute emphasized.

Condensate, the so-called light oil produced in gas fields, can also play a role.

"Already at the first stage of the development of the Absheron field, about 600 thousand tons of oil per year are produced there. Production began in 2023. The start of work on the second phase of this field is planned for 2029-2030, during which additional production of up to 1.17 million tons of condensate is expected. Production at the Karabakh field is expected to begin by 2030. Plans are being made to develop the next phase of the Umid field, where condensate production is also expected," the expert said.

If all forecasts are confirmed, then, according to Ilham Shaban, by the end of the next five years it will be possible to talk about the beginning of a new oil boom.