BAKU, Azerbaijan, October 3. Azerbaijan
currently has the capacity to process up to 30 million tonnes of
oil products per year. This figure does not refer solely to
capacity within the country. Of this total, around 7 million tonnes
relates to refining in Azerbaijan, while another 23 million tonnes
comes from overseas facilities acquired or established with the
participation of SOCAR.
President Ilham Aliyev cited this figure while speaking about
the results of the country’s energy policy at the 8th Congress of
the New Azerbaijan Party on October 2. In this context, the
30-million-tonne figure makes it possible to view this policy on a
somewhat different scale — not only through oil and gas production
and exports, but also through the refining infrastructure created
abroad.
As the head of state noted, Azerbaijan is already receiving
requests from various countries for supplies of oil products.
That is why 30 million tonnes is not a figure associated with a
single facility, but rather with a distributed system. According to
the President, the capacities are located in three locations: one
refinery was built from scratch, while two others were acquired.
This model expands SOCAR’s ability to operate in different markets
and reduces dependence on a single country or production
facility.
Refining as a Pillar of the Export Strategy
SOCAR’s overseas assets allow the company to operate not only in
production but also at subsequent stages of the energy value chain.
In Türkiye, the STAR refinery has been operating since October
2018. It links crude oil refining with petrochemical production and
is of significant importance to SOCAR’s activities in the
region.
In May 2026, SOCAR completed the acquisition of a 99.82% stake
in the Italian company Italiana Petroli. The IP Group owns two
refineries, storage facilities and an extensive retail network
across Italy. This is not simply an acquisition of production
capacity: the integrated infrastructure gives the company access to
storage, logistics and the end-user market.
At the same time, overseas refining does not mean abandoning
domestic production capabilities. Rather, these are complementary
links: domestic oil production and refining in Azerbaijan are
combined with production and distribution assets abroad. Such a
structure allows the company to respond more flexibly to changes in
demand and logistics.
Growing Demand and Energy Security
In his speech, the President linked the prospects for
Azerbaijan’s exports to continuing geopolitical instability around
the world and the risks of supply disruptions.
“The new geopolitical and economic reality is that many
countries today cannot obtain energy resources as before. Here
again, Azerbaijan is among the rare countries globally that
produces, extracts, and exports all types of energy resources –
crude oil, petroleum products, natural gas, electricity,
petrochemical products, and fertilizers. Energy is the primary
source of production for these products as well.
Unfortunately, the crisis experienced today, especially
regarding petroleum products, will likely deepen further. This
crisis has two sources: one to our north and the other in the Gulf
region to the south. Some traditional suppliers are already being
forced to halt exports in order to meet domestic demand,” the head
of state said.
In this context, energy security becomes part of the national
security of consumer countries, while supply reliability becomes a
factor of foreign-policy significance. Azerbaijan already exports
gas to 16 countries, predominantly European ones, through the
Southern Gas Corridor. Gas transportation through the Trans
Adriatic Pipeline has reached 60 billion cubic meters.
Statistics for January–August 2026 demonstrate the scale of
export flows: during this period, Azerbaijan exported 14.678
million tonnes of crude oil and oil products worth $9.282 billion.
Gas exports amounted to 16.378 billion cubic meters and generated
$5.711 billion. Natural gas accounted for 26.18% of the country’s
total exports during the reporting period. These figures reinforce
the point that Azerbaijan’s role rests on several energy areas
rather than on a single commodity.
ACG: Managing a Mature Field and Developing New Sources
of Production
A special place in this strategy is occupied by the
Azeri-Chirag-Gunashli (ACG) block. From the start of commercial
development in November 1997 through the end of the first half of
2026, around 4.6 billion barrels of oil were produced from the
block. The state also received 63 billion cubic meters of
associated gas.
ACG is at a mature stage of development, and the natural decline
in oil production is an expected process for a field that has been
operated for more than three decades. Therefore, the task is no
longer simply to increase output. It is important to extract
remaining reserves more efficiently and sustain production through
technology and new projects.
In 2026, bp launched two pilot enhanced oil recovery projects at
ACG — BrightWater and IWAG. They are aimed at extracting oil
remaining in the reservoir. Seismic survey data, well data,
production indicators and geological models are being used to
manage production dynamics. In the first half of 2026, capital
expenditure on ACG activities amounted to around $733 million, up
31.4% from the same period a year earlier.
At the same time, the profile of the asset itself is changing.
Production of free natural gas at ACG began in June. Recoverable
reserves are estimated at around 4 trillion cubic feet, with the
potential to increase to 6 trillion cubic feet. This expands the
significance of the block beyond traditional oil production.
Additional potential is associated with the ACE platform. Two
years after production began, by April 15, 2026, the platform had
produced 2.1 million tonnes of oil. The approximately $6 billion
project is designed for production capacity of up to 100,000
barrels per day, while cumulative production over its operating
life could reach 300 million barrels.
New Projects — Building for the Future
The stability of the energy strategy depends not only on
existing assets but also on the ability to replenish the resource
base. In this context, the contracts mentioned by the President are
important, including the acquisition of overseas oil assets and new
production agreements.
One of the key decisions of the second International Investment
Forum, held in Baku on September 25–26, was the final investment
decision on the full-scale development of the Absheron field. The
second phase envisages subsea production and the transportation of
gas and condensate through a 140-kilometer multiphase pipeline to
the Sangachal Terminal. At peak production, the project could
provide up to 12.7 million cubic meters of gas per day — around 4.5
billion cubic meters per year — and 37,000 barrels of condensate
per day. Production is expected to begin in late 2028 or early
2029.
SOCAR has also reached an agreement with ExxonMobil on the joint
exploration and development of unconventional hydrocarbon resources
in the Orta-Kür basin. The parties will each hold a 50% stake, with
ExxonMobil serving as the project operator. The agreement will
enable international expertise and technology to be brought in to
assess resources that require specialized development
approaches.
Other agreements reflect SOCAR’s efforts to expand international
ties across the entire energy value chain. With Comstock Resources,
the company intends to explore opportunities to liquefy gas from
U.S. shale assets and subsequently sell it on international markets
outside the United States. With Apollo, SOCAR is discussing the
assessment of investments in upstream projects, while agreements
with Germany’s SEFE and VNG provide for cooperation in gas,
infrastructure and energy security and, in the case of VNG,
scientific and technical aspects of hydrogen and its
derivatives.
The trading segment is also developing. SOCAR Trading already
operates with Kazakhstan and Turkmenistan in the oil and oil
products trading sector, while cooperation with Uzbekistan began in
2026. The joint venture Turan Energy has started practical
operations: supplies of Uzbek naphtha are underway, while
opportunities for trading diesel fuel delivered through the
terminal in Kulevi are also being explored.
Long-Term Strategy in a Changing Market
President Ilham Aliyev’s speech highlights Azerbaijan’s
pragmatic approach to the energy transition. The development of
renewable energy does not eliminate the importance of oil and gas
for the modern economy, but neither does it exempt producers from
the need to upgrade infrastructure, improve production efficiency
and diversify markets.
Azerbaijan’s strategy consists of several interconnected
elements: developing existing and new resources, investing in
mature fields, overseas refining, expanding trading operations and
cooperating with international companies. The 30-million-tonne
oil-products figure symbolizes precisely this range — the ability
to participate not only in the supply of raw materials but also in
their processing and sale.
At a time when the need for reliable supplies may grow, the
importance of the infrastructure created extends beyond commercial
benefits. For Azerbaijan, it is becoming a tool of economic
resilience and a factor in its international influence. The
sustainability of this role will depend on how successfully the
country can offset natural declines at mature fields, bring new
projects online and effectively utilize both domestic and overseas
assets.
