Mineral industry of Azerbaijan

As of 2005, Azerbaijan produced a range of metals and industrial minerals, including aluminum, lead, iron, and zinc.

Azerbaijan’s importance as a world mineral producer, however, was based on its petroleum extracting industry. The country has been a significant oil producer for more than a century, but recent focus has been on developing offshore resources in the Caspian Sea. Production from the country’s Soviet-era fields are in decline, but since independence, foreign direct investment in offshore fields had revitalized the oil sector through the development of large-scale new projects and the refurbishment of older ones. In 2005, Azerbaijan had signed more than 20 major agreements to develop oilfields with approximately 30 companies from 15 countries.

Oil extraction and refining accounted for more than 75% of the value of industrial production. The oil extraction and refining sectors and the metallurgy and metal fabrication sectors employed more than 60,000 people in 2005. The country was becoming a major producer of oil, producing far more than it consumed, but its natural gas production in 2005 was still significantly below its consumption. The country was increasing its steel products production at the Baku Steel company, a privately owned company that produced steel products from steel scrap.

In 2005, production increased for practically all mineral commodities. Crude petroleum production increased by more than 43% compared with that of 2004. The country was developing its steel industry, although it is still on a small scale.

Oil production
Oil production occupies a leading place in the country’s economy. The dynamics of oil and condensate production in Azerbaijan (mln): 1997 – 9.1; 1998 – 11.4; 1999 – 14.4; 2001 – 14.91; the first half of 2003 – 5.2. The production of natural gas was (in bcm 3 ): 1997 – 5.26; 1998 5.6; 1999 – 6.1; the first half of 2003 – 2.9. State Oil and Gas Company State Oil Co. of the Azerbaijani Republic ( SOCAR ) is gradually reducing oil production while the international company Azerbaijan International Operating Co. (AIOC) increases its capacity. In 2001, SOCAR extracted 60%, and AIOC – 40% of oil and condensate.

Azerbaijan is developing the most modern of its two refineries – Azerneftyag, with a capacity of 14 million tons per year, but the plans for further modernization, which is based on domestic financial resources, depends on the growth rate of oil production.

Azerbaijan’s oil and gas reserves are attractive for foreign oil companies. Azerbaijan among the CIS countries leads the growth rate of foreign investment (from 10% to 50% per year). For the period from 1996 to 2000, the amount of foreign investment amounted to $ 5 billion . US . At the turn of the XX-XXI centuries. the main investors in Azerbaijan are oil companies. Bl. 90% of AMOK’s shares are owned by foreign investors: British Petroleum ( United Kingdom , 17.1%), Amoco ( USA , 17.0%), Lukoil (Russia, 10.0%), Pensoil ( USA , 4.8%), Youngock ( US , 10.0%), Statoil (Norway, 8.6%), Itochu Oil (Japan, 3.9%), Ramko ( Great Britain , 2.1%), TPAO (Turkey, 6.7%), Exxon ( USA, 8.0%), Delta-Nimir (Saudi Arabia, 1.7%).

Azerbaijan has 1130 km of pipelines for the transportation of crude oil , 630 km for the transportation of petroleum products and 1240 km of gas pipelines. On the main pipeline, oil through the territory of Georgia goes to Batumi, and then goes for export – either in crude form or after processing in the Batumi oil refinery. Another pipeline, the northern, is laid through the territory of Russia in Novorossiysk. Capacity of oil pipelines – 25 million tons of oilfor a year. The two gas pipelines follow the oil pipeline in Tbilisi, and thence to the north through the Greater Caucasus to Russia and Western Europe. The agreement between the investors and the Azerbaijani government on the construction of the Baku-Ceyhan oil pipeline has been reached. Among the investors are the State Oil Company of Azerbaijan – SOCAR (50% participation), British BP (25.41%) and Ramco (1.5%), American Unocal (7.48%), Norwegian Statoil (6.37%), Turkish TPAO (5.02% ), Japanese Itochu (2.92%) and Saudi-American Delta-Hess (1.25%).

The company Anglo Asian Mining PLC started gold mining in 2009 in Azerbaijan. Gold was mined on the gold and copper mines of Gedebey. In total, the company produced 1.9 Mt of gold in 2010. In the same year, Anglo Asian Mining PLC acquired a license for gold mines in Azerbaijan. These gold-bearing deposits produced 2,500 tons of silver, 1.5 million copper and 400 tons of gold. Thanks to this volume of production, the government managed to increase gold production by 2014. In 2016, Anglo Asian Mining PLC reported a total production of 65,394 ounces of gold, 1.941 tonnes of copper and 165,131 ounces of silver.

Combustible minerals
Sources of fossil fuels in Azerbaijan are represented by oil, gas, oil shale, peat, etc. The oil industry plays an important role in the local economy. Oil is extracted from both continental and offshore fields.

Azerbaijan also produces hydrocarbon gases. Over the past 35-50 years, many gas-condensate fields have been found and developed.

In 2010, Azerbaijan increased natural gas production by 2.1% compared with 2009. The reserves of natural gas in the country reached about 30 trillion cubic feet. as of the year 2011.

In 2010, the oil produced at the Azeri-Chirag-Gunashli field was processed at two refineries in Baku: the Baku Oil Refinery named after Heydar Aliyev and the New Oil Refinery. These refineries together produce about 400 billion barrels of oil per day.

Other Mining Industries
The mining and metallurgical industry of the country is represented by the Sumgayit aluminum plant with a productivity of 50 thousand tons per year, the aluminous plant of Ganja with the productivity of 450 thousand tons / year, alunite mining complex Zaglik, Dashkesan Iron Ore GOK and others. On the basis of magnetite ores of the Dashkesan lineage. The Azerbaijani GOK is the largest in the Transcaucasus with the productivity of more than 1.4 million. iron ore concentrate (2001). Products of GOK are exported to g.G. to Georgia (on Rustavi MK).

Aluminum plant in Ganja, which controls Azerbaijan Aluminum, in 2001 reduced alumina production by 56.4% due to lack of raw materials. In 2002 the company planned to produce 300 thousand tons of alumina. Dutch company Fondel Metal Participation BV plans to invest $ 1 billion in the development of the aluminum sector in Azerbaijan for 25 years, including $ 500 million in the next five years.

Mining machinery is represented mainly by machinery, equipment and equipment for the oil industry. In 1997, the Government of A. signed an agreement with the consortium of US companies RV Investment Group Services for exploration and the involvement in the development of 9 gold ore. with investments of 500 million dollars

Fuels accounted for 76% of the value of exports in 2005. The country’s major export was crude petroleum, almost all of which was sold on world markets rather than supplied to other CIS countries. Other mineral exports included petroleum refinery products and alumina. The country imported a variety of mineral commodities, including natural gas.

Mineral resources
Azerbaijan’s major mineral wealth is its oil and gas reserves. Offshore hydrocarbon structures in the Caspian Sea accounted for most of the country’s oil and gas production. Azerbaijan’s proven crude oil reserves were estimated to range from 7 billion to 13 billion barrels (Gbbl) [or from about 950 million metric tons (Mt) to 1.8 billion metric tons (Gt)] based on various industry journals and Government sources. The State Oil Company of the Azerbaijan Republic (SOCAR) has estimated that proven reserves are 17.5 Gbbl (about 2.4 Gt) using the Soviet reserve classification system. This evaluation was not based on market economy criteria and may include resources that are not economically viable. Estimates of natural gas reserves also vary. According to the Oil & Gas Journal, Azerbaijan has proven natural gas reserves of roughly 30 trillion cubic feet (about 850 billion cubic meters, and BP p.l.c. estimates that the country has 48 trillion cubic feet (about 1.4 trillion cubic meters) of proven gas reserves.

Although some effort has been made to promote balanced mineral development of all the country’s mineral resources, the country’s economic development has depended primarily on the development of its large offshore oil and gas resources. These resources are expected to be the country’s chief source of revenue for the coming decades.

In 2004, Azerbaijan exported approximately 211,000 barrels per day (33,500 m3/d) of oil. Exports are expected to more than double to 478,000 bbl/d (76,000 m3/d) in 2006 and to reach as high as 1.1 million barrels per day (170,000 m3/d) by 2008.

Azerbaijan was a net natural gas importer in 2005. The country is expected to become a significant gas exporter following the development of the Shah Deniz natural gas deposit, which is considered to be one of the world’s largest natural gas field discoveries of the past 20 years. According to BP (the project operator), Shah Deniz has potential recoverable reserves of about 15 trillion cubic feet (about 424 billion cubic meters) of natural gas and 600 million barrels (95,000,000 m3)—about 82 Mt] of condensate. Other industry and trade sources have estimated that the field contains as much as 35 trillion cubic feet (990 km3) of gas. The field is being developed by the Shah Deniz consortium, whose members include BP, LukAgip, National Iranian Oil Company (NICO) International, SOCAR, Statoil ASA of Norway, TotalFinaElf, and Türkiye Petrolleri Anonim Ortaklig (TPAO) of Turkey.

In the first phase of the Shah Deniz field’s development, production of natural gas for export was expected to begin in late 2006. In the second phase, according to BP, the Shah Deniz project could produce an additional 1 trillion cubic feet (28 km3) per year of natural gas by as early as 2015.

Although Azerbaijan lacks any infrastructure for the export of natural gas, efforts were underway to secure export routes and customers for gas deliveries beginning in 2006. The main conduit for Azerbaijan’s natural gas exports would be the South Caucasus Pipeline, also known as Baku-Tbilisi-Erzurum, which would run parallel to the Baku-T’bilisi-Ceyhan oil pipeline for most of its route before connecting to the Turkish gas pipeline network near the town of Horasan in Turkey. Pipeline construction began in late 2004 and was scheduled to be completed during the first quarter of 2007. The pipeline was expected to carry 233 billion cubic feet (6.6×109 m3) per year initially; this volume could be increased later to up to 700 billion cubic feet (2.0×1010 m3) per year with the future addition of compression stations.

With the new pipeline infrastructure in place, Shah Deniz would be capable of producing approximately 350 billion cubic feet (9.9×109 m3) per year of natural gas by 2009. Supplies of natural gas from Shah Deniz and associated gas from the Azeri Chirag Gunashli (AGC) and the Bakhar-2 projects are expected to make Azerbaijan self-sufficient in natural gas and to result in significant export revenues.

Source from Wikipedia