Market Report, "Azerbaijan Oil & Gas Report Q3 2016", published

From: Fast Market Research, Inc.
Published: Thu May 12 2016

Our outlook on Azeri oil is heavily bearish, with the major ACG fields falling deeper into decline. Investments to stabilise output wil l help soften the fall; however, with a lack of new discoveries brought onlin e this will be insufficient to reverse the overall trend. In contrast, we remain bullish on the prospects for Azeri gas, underpinned by large-scale new production from Shah Deniz. Prospects on the downstream remain poor, with ageing and low complexity infrastructure, a limited market for growth and weak prospects for investment.

Latest Updates and Key Forecasts

The country boasts substantial, prospective and underexplored acreage, in particular offshore in the South Caspian basin. SOCAR has also announced plans to restart onshore exploration, targeting ultra-deep oil deposits.

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A shortage of drilling rigs continues to delimit drilling activity in the Caspian Sea. A spate of exploration and appraisal, development and production wells are set to be spud between 2015 and 2017; SOCAR needs to secure additional drilling rigs in the coming quarters if it is to avoid the emergence of a major bottleneck in its upstream.

Oil output decreased in 2015, according to reports by SOCAR. In part this stemmed from planned maintenance works, but the bulk of the loss came from faster-than-expected depletion rates at the major ACG fields. We expect this trend to continue in 2016 and 2017, despite increased gas reinjection boosting recovery.

The gas sector is set for strong growth, driven in large part by development of the Shah Deniz II, which reached FID in 2013 and is targeting first gas from 2018.

President Aliyev announced plans to upgrade the existing refining capacity to comply with Euro-5 fuel standards. This forms part of a broader planned expansion of the country's downstream segment; however, in context of weak refined fuels demand growth and mounting global supply, we question the economic viability of these types of project.

The Azerbaijan Oil & Gas Report has been researched at source and features BMI Research's independent forecasts for Azerbaijan including major indicators for oil, gas and LNG, covering all major indicators including reserves, production, consumption, refining capacity, prices, export volumes and values. The report includes full analysis of industry trends and prospects, national and multinational companies and changes in the regulatory environment.

BMI's Azerbaijan Oil & Gas Report provides professionals, consultancies, government departments, regulatory bodies and researchers with independent forecasts and competitive intelligence on the Azerbaijani oil and gas industry.

Key Benefits
Benchmark BMI's independent oil and gas industry forecasts for Azerbaijan to test consensus views - a key input for successful budgeting and strategic business planning in the Azerbaijani oil and gas market.

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