- Production: Production highs and lows
- Demand: Demand stagnates after a dramatic drop
High production ensures a strong CIS export position
CIS oil production hit a new high of 14.3 million barrels per day in 2017. This was an increase of 12% over the region’s output a decade ago.
By far the biggest producer is the Russian Federation. It produced 11.3 million barrels per day, giving it a 79% share of the CIS total. Russia’s production was 1.2 million barrels ahead of its output in 2007 and consistent with the previous year’s output – the highest since 1988.
Kazakhstan was the next-largest producer with 1.8 million barrels per day, giving it a 13% share of CIS production. The nation’s volumes were up by 30% over the previous decade. Its production level is now comparable to Norway’s.
The third-most important CIS producer is Azerbaijan, with a 6% share based on daily production of 0.8 million barrels.
Demand stagnation continues
The CIS consumes 4.4% of the world’s oil – about 4.3 million barrels per day. This is half of what the USSR required in the early 1980s before its political collapse at the end of that decade.
It was not until the early part of the 21st century that demand in the region began to recover, although it is still well below its Soviet peak.
Now, as then, the bulk of demand is Russian. In 2017, Russia consumed 3.2 million barrels of oil per day – equivalent to 75% of regional demand. The next highest levels of consumption were in Kazakhstan, with 7% and Ukraine at 5%.
With relatively low levels of demand the CIS has significant export potential. In 2017, Russia could export 8.0 million barrels per day, up from 7.3 million barrels per day a decade earlier. Kazakhstan’s export potential in 2017 was 1.5 million barrels per day, while Azerbaijan’s was about half that.
What remains and where
The CIS has access to 9% of the world’s proven oil reserves. Russia holds 73% of regional reserves. Kazakhstan has 21% and Azerbaijan 5%.
Investment expresses confidence in the region’s oil future
The level of SOCAR’s confidence in regional oil production can be determined by the nature of the upstream challenges we are glad to tackle. Our operated assets include some of the region’s – and the world’s – most challenging wells. The Bulla-Deniz and Umid Fields, for example, are at a pressure of more than 15,000 pounds per square inch, with depths to 6,700 metres.
SOCAR is also a shareholder and state representing body in the Azeri-Chirag-Deep Water Gunashli and Shah-Deniz mega fields operated by BP-led consortiums. ACG produces around 600,000 barrels daily exported to the world markets through two oil pipelines – Baku-Tbilisi-Ceyhan and Baku-Supsa. Shah-Deniz produces 10 billions of cubic meters of gas per annum from the first stage of the project; second stage at plateau is going to produce other 16 billions of cubic meters annually. Production from Shah- Deniz is delivered to Azerbaijani local market, as well as to Turkey and Europe through the Southern Gas Corridor pipeline infrastructure.
Other examples of SOCAR’s commitment to regional hydrocarbon developments are the Garabagh and Absheron Fields, being developed jointly with Equinor and Total respectively. Production is expected to start in 2020-2021. Looking beyond that milestone, SOCAR is also planning the second stage of development of the Umid Field and exploration wells on the adjacent Babek prospect.
In 2017, SOCAR and partners produced jointly 283.6 million barrels of oil and 28.6 billions of cubic meters of gas in Azerbaijan.
Yashar Latifov, Vice President for Field Development, SOCAR