SOCAR achieved steady oil and natural gas production in 2017 by increasing the volume of drilling operations.
During the year SOCAR conducted 138 thousand meters of drilling work raising it by 30.7% against the relevant figure of 2016. Of this amount, 93% fell to the share of development drilling, 7% - exploration drilling. In total, 81 new wells were put into operation after finishing their construction. SOCAR produced 7.4 million tons of crude oil and 6.1 billion cubic meters of natural gas, there were slight differences correspondingly by 1.4% and 3.3% as compared with the relevant figures of 2016. In total, 38.7 million tons of crude oil and 28.6 billion cubic meters of natural gas were produced in Azerbaijan in 2017.
SOCAR’s crude oil export for 2017 amounted 20.7 million tons. SOCAR exported 1.5 million tons of oil refining and petrochemical products, which contributed to the growth of total revenues last year. The products such as diesel and aviation fuels, high-pressure polyethylene, gas carbon, propylene, LNG and pyrolysis resin have an important share in the export of oil refining and petrochemical products.
It should be noted that the capacity of SOCAR’s prospective oil and gas fields will facilitate stability of oil production and increase the natural gas production in upcoming years. Due to the measures for the prevention of output lowering in the old oil fields, SOCAR’s oil production coincides with the framework agreed by the other oil producers for the price regulation in the world oil market. To secure steady oil production, along with the drilling of new wells, old ones are also restored and included in the exploitation fund, fundamental repair works are carried out in the out-of-exploitation wells, and projects based on geological-technical measures are implemented for this goal. Advanced technologies are used for extracting residual oil content from the deactivated wells.
SOCAR specialists could achieve increase of production in some oil fields such as “Absheronneft” and “Bibiheybat”, which raised their output 8.7% and 1.9% correspondingly against the indexes of 2016. “Neft Dashlari”, making significant contribution to the stable oil production, produced 1 million tons of crude oil in 2017 and achieved record figures in the last decades. Dashgin Iskanderov, CEO of Azneft said: ““Absheronneft” has increased its total output for 2.5 times in recent years with small expenditures. Today cost of production at Azneft is among the lowest in the world, it means that our operations are highly efficient, which is the ultimate result of the professional skills and strong will of Azerbaijani oilmen.”
SOCAR’s oil and gas trading operations has been one of the reasons for positive dynamics in the oil export. Apart from that, there was a high demand for Azerbaijani oil last year. Elshad Nassirov, SOCAR’s Vice President for Investments and Marketing said: “SOCAR introduced Azerbaijani oil onto the market under the brand of ‘Azeri Light’, as one of the most qualitative oils in the world. Bringing ‘Azeri Light’ to the market as an independent brand raised the value of our national wealth.”
In the light of the OPEC+ deal for the stabilization of crude prices on the world market being extended until the end of 2018, Azerbaijan continued adhering strictly to its’ requirements. The rise in oil price, because of the curbing output, has had a positive impact on SOCAR’s revenues, compensating for the lower production volumes.
SOCAR paid AZN 1.5 billion to the State Budget for 2017. Compared with the previous year’s figures, the company’s budget payments increased by AZN 115.6 million or 8.3%. In addition, SOCAR’s payment to the State Social Protection Fund amounted AZN 156 million and increased by 8% against the same period of 2016.
The growth of SOCAR’s budget payments is an indication of the company’s stable financial situation. Suleyman Gasimov, SOCAR Vice President for Economic Issues said: “Following the strategic course determined by the President of the Republic of Azerbaijan Ilham Aliyev, SOCAR has continued extension and diversification of its operational portfolio in recent years. The international projects we carried out and investments within and outside the country had a positive impact on the financial results, creating a good environment for sustainable rise of budget payments.”
It must be noted that on the basis of the strategic development view elaborated some years ago, SOCAR has made important steps toward balancing its revenue sources, developing petrochemical oil and gas refining industries. Amid the recent oil price downturn, few changes in petrochemical products’ price have had a positive impact on the company’s revenues. As a result, SOCAR has endured the world energy crisis and secured its profitability in 2016-2017.
SOCAR and IBM (NYSE: IBM) announce establishment of a joint venture called Caspian Innovation Center LLC for the purpose of building and operating a competitive analytics and delivery center to provide IT, business transformation and business consulting services in Azerbaijan, the Caspian Region and other countries.
The SOCAR-IBM joint venture will offer its’ services to SOCAR and other companies in the region, in order to facilitate digital business transformation and boost the efficiency of production in the energy industry and across sectors. The transformation program will bring the best-practice processes and technology from IBM to Azerbaijan and region. The joint venture will set a basis for practical solutions and IT-related analytics in Azerbaijan, thus essentially contributing to the development of the human capital.
This strategic partnership will engage SOCAR’s industry expertise and IBM’s digital, cognitive computing and data science capabilities in building differentiated industry solutions and competencies in the region.
Rovnag Abdullayev, president of SOCAR said, “Digital business transformation has become an essential element of successful management of industrial operations. SOCAR’s unique experience in Azerbaijan, the first country of industrial oil production, will be merged with IBM’s advanced cognitive intelligence and analytics capabilities. This synergy can potentially expand to play a role of regional hub, facilitating digital transformation across other industries. That would boost the job creation in high-skill, high-paid areas, effectively stretching our contribution to Azerbaijan’s human capital development beyond just oil&gas; industry.”
SOCAR is expected to gain dramatic efficiency and flexibility with the development of IT processes and operations to analyze more data faster than before, thus supporting intelligent ways of the exploration of oil and gas fields, while reducing the environmental footprint. The cooperation is expected to help IBM establish stronger presence not only in Azerbaijan but in the whole Caspian region and beyond.
“The establishment of the SOCAR-IBM joint venture will help to accelerate the digital transformation of the State Oil Company of the Azerbaijan Republic, while contributing to the development of the global energy industry,” said Erich Clementi, Senior Vice President, Global Markets, IBM.
Based on the reached agreement, the SOCAR-IBM joint venture may expand its’ activities into other business intensive areas, such as in new geographies or with various customers.
IBM is a global enterprise operating in over 170 countries. Today IBM is focusing on key growth areas, such as cognitive solutions, cloud computing, security, and brings innovative solutions to a diverse client base to help solve some of their toughest business challenges. In addition to being the world's largest IT and consulting services company, IBM is a global business and technology leader, innovating in research and development to shape the future of society at large. IBM's prized research, development and technical talent around the world partner with governments, corporations, thinkers and doers on ground breaking real world problems.
For more information on IBM Services, please visit:https://www.ibm.com/services/
SOCAR is a major energy company in Europe. While primarily focused on the economic interest of the people of Azerbaijan, it is an international integrated company and manages a number of operations abroad. The company fulfills many functions among which exploring oil and gas fields, producing, processing, and transporting oil, gas, and gas condensate take a big part. SOCAR also markets petroleum and petrochemical products across a number of international markets. SOCAR operates in various countries, such as Romania, Switzerland, Georgia, Turkey, Ukraine and Azerbaijan, including trading activities across the globe.
For more information, please visit http://www.socar.az/socar/en/home