3.125
%
Uncertain
96
mm boe
44
%
While state companies continue to dominate oil & gas, the country continues to open its hydrocarbon industry up, creating opportunities for smaller companies, especially in the rehabilitation of old fields. The PSC regime has proven to be stable and a key benefit for attracting investment, and is likely to continue to flourish. The Azeri Presidential elections are imminent, which could induce some near term volatility. We reiterate our Uncertain outlook.
January 25, 2024
Caspian
mm bbl
bcf
Southwestern Asia, bordering the Caspian Sea, between Iran and Russia, with a small European portion north of the Caucasus range.
PSC/PSA
Azerbaijan’s fiscal regime consists of a combination of production sharing agreements (PSAs) and host government agreements (HGAs). In addition, the Law on Application of Special Economic Regime for Export-Oriented Oil and Gas Operations (the Law) came into force on 17 April 2009. The Law applies to export-oriented oil and gas operations carried out by contractors, as well as by subcontractors, as defined in the Law.
In June 2022, Azerbaijan and the European Commission signed a memorandum of understanding to double Azerbaijan’s gas exports to Europe by 2027. By the year 2027, Azerbaijan plans to increase its gas transportation through the Trans Adriatic Pipeline (TAP) from the current 11bcm to 20bcm. In 2021, Azerbaijan supplied Europe with 19bcm of gas. Volumes increased to 22.6bcm in 2022 and are expected to reach 24.5bcm in 2023. While the oil and gas sector has historically attracted the largest share of foreign investment, the Azerbaijani government has targeted four non-oil sectors to diversify the economy: agriculture, tourism, information and communications technology (ICT), and transportation/logistics. Azerbaijan is also expected to continue to develop Azerbaijan’s central position on the east-west Middle Corridor, an increasingly important trade route because it avoids Russia.
Source: ESRI, Heritage Index, HMG Foreign & Commonwealth Office, US Department of State, International Trade Administration, International Law Review, Ernst & Young, Wood Makenzie & OGA data.
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