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Unlocking Azerbaijans hydrocarbon potential through exploration, production and transportation Bahram Huseynov Vice-president on Geology and Geophysics, SOCAR 1 Azerbaijan the Land of Fire Yanar Dag -Burning Hill is a natural


  1. Unlocking Azerbaijan’s hydrocarbon potential through exploration, production and transportation Bahram Huseynov Vice-president on Geology and Geophysics, SOCAR 1

  2. Azerbaijan the Land of Fire “Yanar Dag” -”Burning Hill” is a natural gas fire as a result of steady seep of gas Over 400 mud volcanoes in the coastal area of from the subsurface on a hillside on Azerbaijan. Mud volcanoes are closely associated the Absheron Peninsula near Baku. with hydrocarbons trapped underground. Oil extraction methods before the first half of A turning point in oil production was in 1846 when the first 19 century were very primitive —mainly hand- in the World oil well mechanically drilled in Bibiheybat near dug wells, drilled to very shallow depths. 2 Baku.

  3. SOCAR - STATE OIL COMPANY OF THE AZERBAIJAN REPUBLIC • The State Oil Company of the Azerbaijan Republic (SOCAR) is involved in exploring oil and gas fields, producing, processing, and transporting oil, gas, and gas condensate, marketing petroleum and petrochemical products in domestic and international markets, and supplying natural gas to industry and the public in Azerbaijan. Three production divisions,one oil refinery and one gas processing plant, an oil tanker fleet, a deep water platform fabrication yard, two trusts, one institution, and 22 subdivisions are operating as corporate entities under SOCAR. • Joint ventures (including ventures in Georgia and Turkey), • SOCAR is member of Upstream International Benchmarking Consortium and International Association of Oil and Gas Producers.

  4. Azerbaijan exploration potential • 80 oil and gas fields were discovered, 53 in onshore and 27 in offshore. • Production taking place in 65 fields. • First discovery well was drilled in 1846 in Bibiheybat near to Baku. • First industrial oil production started in 1871 in fields near to Baku, Absheron Peninsula in Bibiheybat and Balakhany- Sabunchy- Ramana fields, which are still in production. • More than 2 billion tones of oli plus condensate and more than 740 bcm of gas produced in from start of first production.

  5. History of oil and gas production in Azerbaijan Azerbaijan Historical Oil Production, thousand tons 60,000 2011 pick production 2 billion tones oil produced on 08-Nov-2017 50,000 40,000 1950- first 1997- first 1941 pick offshore oil ACG oil production 30,000 1871- first 1901 pick 1846 20,000 onshore oil production fist well 10,000 - 1846 1850 1854 1858 1862 1866 1870 1874 1878 1882 1886 1890 1894 1898 1902 1906 1910 1914 1918 1922 1926 1930 1934 1938 1942 1946 1950 1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014 Onshore Offshore ACG Shahdeniz Azerbaijan Historical Gas Production, million cubic meters 35,000 2014 pick production 30,000 ~740 bn. m3 of the gas has been produced by the mid 2018 25,000 2006- first 1984 pick 1963- first 20,000 SD gas production offshore gas 15,000 1921- first onshore gas 10,000 5,000 - 1920 1922 1924 1926 1928 1930 1932 1934 1936 1938 1940 1942 1944 1946 1948 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Onshore Offshore ACG Shahdeniz 5

  6. Azneft Production Business Unit  Azneft BU as a national operator produces oil and gas reserves of SOCAR on 42 onshore and offshore oil and gas fields. In 2017 BU produced 6.2 million tones of oil and 5.4 billion m3 of gas. Legendary Neft Daşları , also known as the Oil Rocks was the first offshore oil production in the world (1949), incorporating numerous drilling platforms via coseways. It is featured in Guinness World Records as the world's first offshore oil production. The most distinctive feature of Neft Daşları is that it is actually a functional city with a population of about 2,000 and over 300 km of coseways built on piles.

  7. The Contract of the Century • Under the leadership of national leader Heydar Aliyev, one of the landmark agreements in Azerbaijan`s 20th-century history was signed. • The Agreement on the Joint Development and Production Sharing for the Azeri and Chirag Fields and the Deep Water Portion of the Gunashli Field in the Azerbaijan Sector of the Caspian Sea was signed on September 20, 1994. • Since that, SOCAR and foreign oil companies have signed 38 production sharing agreements. 7

  8. Azeri-Cirag-Guneshli Fields Development • Azeri-Chirag-Deepwater Gunashli ACG is operated by BP on behalf of the Azerbaijan International Operating Company. It is the largest oilfield in the Azerbaijan sector of the Caspian basin, located about 100km east of Baku. • Production began in 1997 from the Chirag section. It now also includes the Central, West and East Azeri, Deepwater Gunashli and West Chirag sections. • ACG production continues steadily , in 2017 produced more 29 million tonnes of oil. It also delivered SOCAR 2.75 billion cubic metres of gas for domestic use. About 10 bcm of associated gas injected back to reservoir for pressure support 8

  9. Shah Deniz Gas to European market 28.8% 10% 19% 15.5% 10% 10% 6.7% AzSD • 16 bcm gas from SD 2 • 26 subsea wells, 14 wells drilled • 4 subsea wells on production with total 8 mln m3 per day • First gas to Turkey 30 June 2018

  10. Oil and Gas Prospects in Azerbaijan Blocks contracted for exploration (3D seismic) 1. Ashrafi-Dan Ulduzu- Aypara 2. D-230 • 8 Didscovered and being prepared for development 1. Absheron 2. Umid 3. ACG “Deep Gas” 4. Karabakh Prospects prepared for exploration drilling 1. Shahdeniz 3 2. Babek 3. Shafaq-Asiman 4. Nakhchivan 5. Zafar-Mashal 6. North Khali 7. Qarabatdaq 8. Bibiheybat East 66 leads requiring additional seismic: - 34 onshore - 32 offshore 10

  11. Miocene and Cretaceous Exploration Plays 11

  12. SOCAR- JOGMEC Collaboration • Since 1989, 31 geoscientists and reservoir engineers from SOCAR participated in 3 months Overseas Training Programs, JOGMEC’s Research and Training Center in Tokyo which were fully sponsored by JOGMEC. May 2018, during 25 th • MoC signed on 30th of International Caspian Oil and Gas Conference and Exibition in Baku which assumes collaboration in the areas of Geological and Geophysical Survey, Technical Corporation and Human Resources Development 12 12

  13. SOCAR-INPEX/ WASEDA Univ. Collaborations since 2014 2018, Baku 2017, Higher Oil School , SOCAR. 2016, Waseda Univ. 2016, Waseda Univ. 2017, Waseda Univ. INPEX organized Trainings for SOCAR specialists and BHOS students: 2014/2015 Discussion by on Training Programme in Baku 2016 Geo/Reservoir Modeling and Field Development concept Training in Japan – 3 months 4 Geol. /RE 2017 Geo/Reservoir Modeling and Field Development concept Training in Japan – 3 months 4 Geol. /RE 2017 EoR lecture at Baku Higher Oil School by Prof. Kurihara, Waseda Univ.- for 60 students 2018 EOR simulation and exercise training in Baku for by Prof. Kurihara, Waseda Univ. - 15 SOCAR Geol./RE 13 2019 Geo/Reservoir modeling and Field Development concept Training in Japan (planned)

  14. Corporation between SOCAR and ITOCHU EOR/IOR Joint study in Pirallahi field started on April 2017 Pirallahi field • SOCAR together with ITOCHU is investigating the possibility of EOR on the Pirallahi oil field. For that purposes SOCAR engineers and geologists collaborate closely with ITOCHU specialists. • As a result geological model was constructed using ROXAR RMS software package and possible simulation strategies were investigated by SOCAR and ITOCHU engineers. • To proper tuning of the simulation models SCAL and PVT test results are required. Until now cores were taken from the well. PVT sample will be taken from the same well after starting the production. • After accomplishing EOR simulation studies by using SCAL and PVT data, the economics of the optimized EOR jobs must be calculated and as a result most suitable EOR method will be selected. 14

  15. Diqqətinizə görə təşəkkür edirəm ! Thank you for your attention! ご清聴ありがとうございました

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