Energy in Azerbaijan

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Energy in Azerbaijan describes energy and electricity production, consumption and export in Azerbaijan.


The Araz hydroelectric power station with a total capacity of 22 MW was constructed in 1970, Tartar hydroelectric power station with a total capacity of 50 MW in 1976 and Shamkir hydroelectric power station with a total capacity of 380 MW in 1982.[1]

At that time, along with the construction of power stations, electrical networks were systematically developed and the country's sustainable energy system was created. In those years, "Ali Bayramli" Thermal power station with 330 kV – “Aghdam – Ganja – Aghstafa”, “Ali Bayramli – Yashma – Derbent”, 5th Mingachevir, 500kV 1st and 2nd Absheron, “Mukhranis – Vali” and other power lines, "Yashma", "Ganja", "Agstafa" with 330/110/10 kV, Imishli with 330/110/10 kV, Absheron with 500/330/220 kV, "Hovsan", "Nizami", "Mushfig", "Sangachal", "Masalli", "Agsu" and "Babek" with 220/110/10 electrical substations have been put into operation.[2]

$ 53 million loan was granted to Azerbaijan by the European Bank for Reconstruction and Development for the construction of the Yenikend hydroelectric power station in December 1995, and constructed a Yenikend HPP with a total capacity of 150 MW.[3]

The reconstruction of the Mingachevir hydroelectric power station, 330 kV Aghjabadi, 110 kV Barda substantions and the 330kV Azerbaijan Thermal Power Station - 330 kV “Agjabadi-Imishli” transmission lines were implemented at the expense of the European Bank for Reconstruction and Development and the Islamic Development Bank. [4]

Two gas-turbine units with a capacity of 53.5 MW each at Baku thermal power station at the expense of German bank - Bayerische Landesbank Girozentrale, and a 400MW steam gas plant at the “Shimal” power plant at the expense of the Japanese International Cooperation Bank's loan were commissioned in 2002. [5]

On February 14, 2005, the head of state approved the State Program on “Development of the Fuel and Energy Complex (2005-2015) in the Republic of Azerbaijan”.[6]

Electricity demand of the economy of country has completely been paid by 12 thermal power stations such as Azerbaijan TPP, Shirvan TPP, Shimal TPP, Baku TPP, Nakhchivan TPP, Astara, Khachmaz, Sheki, Nakhchivan, Baku, Quba, Sangachal power stations, and 6 water power stations such as, Mingechevir, Shamkir, Yenikend, Varvara, Araz, Vaykhir HPP. Their total capacity was about 5900 megawatts. 90 percent of electricity production in Azerbaijan accounts for TPPs, and 10 percent for hydroelectric power stations. [2]

The Energy Regulatory Agency under the Ministry of Energy was established on the basis of the Department for State Energy And Gas Supervision of the Ministry of Energy of the Republic of Azerbaijan by the Decree of president dated December 22, 2017, and its charter was approved.[7]

According to the World Energy Trilemma İndex, compiled by the World Energy Council for 2017, Azerbaijan has taken the 31st place (BBA) among 125 countries. [8]

According to the Global Energy Architecture Performance Index report 2017, compiled by the World Economic Forum, Azerbaijan ranked 36th out of 127 countries with 0.67 score. [9]

According to 2016 report of organization that mentioned above, Azerbaijan ranked 32th out of 126 countries with 0.68 score. Economic growth and development was 0,68 score, environmental sustainability 0.57 score, energy access and security 0.79 score.[10]

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  • Production: - 931,990 bbl/d (148,175 m3/d) (2008)
  • Consumption: - 160,000 bbl/d (25,000 m3/d) (2007)

At the turn of the 20th century, Azerbaijan accounted for half of the world’s oil production Template:Balayev, S.G. 1969, Oil of the Country of Eternal Fire: Baku, Azerneshr Publishing House, 160 p.. Oil wells have been operating in Baku since the 1840s. Well before the famous discovery of oil in a drilled well in Pennsylvania by Edwin Drake in 1859, Azerbaijan had drilled its first oil well in Bibi-Heybat (settlement of Baku) in 1846. As of the early 21st century, almost all production came from off shore in the Caspian Sea. Azerbaijan was one of only four former Soviet republics (along with Russian, Kazakhstan, and Turkmenistan) to be self-sufficient in petroleum. However, production declined following the 1991 breakup of the Soviet Union until foreign investment provided the capital for new development, turning this trend around in 1998. Production rose from 194,000 barrels per day (30,800 m3/d) in 1998 to an average of 318,000 barrels per day (50,600 m3/d) in 2004.

According to industry journals and government sources, proven oil reserves as of 2004 totaled between 7 billion and 13 billion barrels (2.1×10^9 m3). The State Oil Company of Azerbaijan (SOCAR) has planned for joint development of the off shore fields (which are now largely untapped) and has entered into several agreements to build oil pipelines. For instance, a project with the Caspian Pipeline Consortium would carry oil from the Caspian Sea to the Russian Black Sea port of Novorossiysk. Another deal with Turkey involved the construction of a 1,760 km pipeline, the symbolic first length of which was installed in September 2002, to carry crude oil from Baku to Ceyhan, Turkey. In 1995 Azerbaijan had 17 offshore oil fields in production. Guneshli, about 96 km off the Azeri coast, currently accounts for more than half the annual production. By the end of 2002, 33 companies in 15 foreign countries had signed agreements to develop 21 major oil fields in Azerbaijan. As of 2003 disputes over off shore oil rights in the Caspian Sea continued to hinder development of those reserves.

From 1987 to 1993, production deceased from 13.8 million tons of oil and 12.5 billion cubic meters gas to 10.3 million tons of oil and 6.8 billion cubic meters of gas. The annual rate of decline in production was 7.1% for oil and 13.5% for gas. The exploratory drilling decreased by 17 times, or by 170,000 meters, was 10,000 meters in 1995 compared to 1970. [2]

"Shah deniz-2"[edit]

"Shah Deniz-2" energy strategic projects is the energy security and energy diversification project.[11]

Contract of the Shah Deniz gas field was signed in 1996, [12] and the first pipeline connecting the Caspian Sea with the Georgian side of the Black Sea coast was built in 1999. The Baku-Tbilisi-Ceyhan main oil export pipeline connecting the Caspian Sea with the Mediterranean and international markets was built in 2006 [13], and the Southern Gas Pipeline in 2007. [14][11][15][16]


The 2013 report by UK-based Global Witness NGO revealed that companies working in Azerbaijan’s oil industry have no transparency and accountability. It has been documented that millions of dollars of revenue disappear into the hands of obscurely owned private companies that cooperate with SOCAR.[17][18]

The report concluded that the opacity of the deals struck by Socar "is systemic" and added, “These findings should be of great concern to the international community as a whole. Oil and its derivative products are central to the Azerbaijani economy, making up 95% of exports in 2011. It is important for Europe that Azerbaijan keeps the oil and gas flowing and maintains a transparent and well-run energy industry. Yet this briefing shows that much of the oil business in Azerbaijan remains opaque, and corruption is still perceived to be at epidemic levels…"[18]

Natural Gas[edit]

Natural gas production has become more important in recent years, especially in Baku, where some of the oil wells have been exhausted. Proven reserves as of late 2004 totaled 1.37 trillion cubic metres. Production of natural gas in 2011 totaled 17.66 billion cubic metres. Ukraine and Iran are interested in running a natural gas pipeline through Azerbaijan en route to Eastern Europe.

On March 10, 2016, Natiq Aliyev, Azerbaijani energy minister, publicly said that Azerbaijan has enough gas reserves to fill the Southern Gas Corridor (SGC). The SGC is an energy project whose goal is to move 10 billion cub meters of gas from Azerbaijan through Georgia and Turkey to Europe.[19]


  • production: 19.44 billion kWh (2011)
  • consumption: 13.57 billion kWh (2011)

In 2011, net electricity generation was estimated at 19.44 billion kWh. In 2011, consumption of electricity was estimated at 13.57 billion kWh. Total installed capacity at the beginning of 2011 was 6.392 million kW. Eight thermal plants supply more than 80% of capacity, and the rest comes from 5 hydroelectric plants. The main power plants (both are thermal) were near Ali Bairamly (1,100 MW) and Mingechaur (2,100 MW).

Report of 2017 [20][21][edit]

The power of the country's electroenergy system has reached 7,172.6 MW. Currently, the system's capacity is 5200 MW and the peak power required is around 3750-3900 MW. In 2017, the production of electricity amounted to 22 209.8 million kWh including 20 445.4 million kWh at thermal power plants and 1 732.8 million kWh of electricity at hydroelectric power stations and totally decreased by 2.0% compared to the corresponding period of 2016 (22 665.7 million kWh).

Totally 4778.8 million cubic meters of natural gas and 311.5 thousand tons of mazut were used for electricity generation during the year.

50 MVA transformer with 110/35 kV, two 110 kV circuit breakers and 35 kV electrical equipment were installed at Hoca Hasan substation of Binagadi district. 110 kV double-circuit transmission line between 110 kV "Liman" and "White City" substations, three transformer substations with 35 / 0,4 kV were constructed.

In 2017, oil production amounted to around 38.7 million tons in the country. 28.9 million tons of extracted oil belonged to the Azeri-Chirag-Gunashli, 2.4 million tons to Shah deniz (condensate) and 7.4 million tons to the State Oil Company of the Azerbaijan Republic.

In 2017, President Ilham Aliyev took part in the opening of the following substations:

Hydroelectric power plants[edit]


Petroleum and natural gas resources are the basis for an extensive system of refineries, which produce gasoline, herbicides, fertilizers, kerosene, synthetic rubber, and plastics.

Foreign investment competition with non-energy sectors[edit]

In January 2015, the president of Azerbaijan, Ilham Aliyev, announced that he would direct his government to create programs to bring investment dollars to industries other than oil. Specifically, President Aliyev cited industrial and agricultural industries as an example.[25]

Aliyev cited Azerbaijani’s economy by saying, “That’s why it’s much easier to attract investments to stable countries with socio-political stability and information growth.” He said that the banking industry will become more important in helping develop the country’s non-energy industries.[26]

See also[edit]


  2. ^ a b c Official webpage of Azerbaijan National library. "Azerbaijan has an independent energy system". (in Azerbaijani). Retrieved 2018-04-24.
  3. ^ "EBRD Annual Report 1995". Retrieved 2018-04-24.
  4. ^ "MINGECHAUR POWER PROJECT". Retrieved 2018-04-24.
  7. ^ "Azerbaijan - Support for the Functioning of the Energy Regulatory Agency". Retrieved 2018-04-24.
  8. ^ "World Energy Trilemma Index | 2017" (PDF).
  9. ^ "Global Energy Architecture Performance Index Report 2017" (PDF).
  10. ^ "Global Energy Architecture Performance Index Report 2016" (PDF).
  12. ^ "Project timeline | Shah Deniz | Operations and projects | BP Caspian". Retrieved 2018-04-24.
  13. ^ "Baku-Tbilisi-Ceyhan pipeline | Pipelines | Operations and projects | BP Caspian". Retrieved 2018-04-24.
  14. ^ "The Southern Gas Corridor | Shah Deniz | Operations and projects | BP Caspian". Retrieved 2018-04-24.
  15. ^ "Azerbaijan's economic priorities for 2017". World Economic Forum. Retrieved 2018-04-24.
  16. ^ "Shah Denize gas field development" (PDF).
  17. ^ New Report Highlights Lack Of Transparency In Azerbaijan's Oil Industry. RFE/RL Dec. 10, 2013
  18. ^ a b Azerbaijan Anonymous Global Witness
  19. ^ "News.Az - Minister: Azerbaijan's gas reserves enough to fill Southern Gas Corridor". Retrieved 2016-03-10.
  20. ^ "Report on Fuel and Energy Complex Activity" (PDF) (in Azerbaijani).
  21. ^ "Allocations directed to fixed assets". Azərbaycan Respublikasının Dövlət Statistika Komitəsi (in Azerbaijani). Retrieved 2018-04-24.
  22. ^ Official web-site of President of Azerbaijan Republic. "Ilham Aliyev inaugurated Sarijalar substation in Saatli district". Retrieved 2018-04-24.
  23. ^ "Samuxda "Yenikənd" yarımstansiyası istifadəyə verilib VİDEO" (in Azerbaijani). Retrieved 2018-04-24.
  24. ^ Official web-site of President of Azerbaijan Republic. "Ilham Aliyev attended opening of Shamkir Automated Management and Control Center of "Azerishig" OJSC". Retrieved 2018-04-24.
  25. ^ CISTran Finance Reports (16 January 2015). "Azerbaijan seeks foreign investment for non-oil sector". CISTran Finance. Retrieved 16 January 2015.
  26. ^ "Azerbaijan Seeks to Attract Foreign Investors to its Non-Oil Sector". United States-Azerbaijan Chamber of Commerce. Retrieved 16 January 2015.

Mir-Babayev, M.F., 2011, The role of Azerbaijan in the world’s oil industry: "Oil-Industry History" (USA), v.12, #1, p.109-123