Azerbaijan, a country in the Caucasus region, has a historical relationship with hydrocarbons, with most of its revenues coming from oil and natural gas. The name Azerbaijan comes from the Persian “azer”, meaning “sacred fire”, referencing ancient temples fueled by gas or crude oil that gushed naturally from the ground. The country has a rich history of oil extraction, dating back to the 19th century when a well was drilled near the capital Baku, quickly surrounded by derricks. Swedes Robert and Ludvig Nobel, brothers of Albert Nobel, were among the first to invest in Azeri oil, forming the Branobel company that became the world’s largest before being nationalized in 1920.
Since gaining independence in 1991, Azerbaijan has become a major producer and exporter of oil and natural gas, with hydrocarbons accounting for 90 percent of exports, half of state income, and a third of the gross domestic product. The country’s offshore deposits in the Caspian Sea are the main sources of oil and natural gas production. The Azeri-Chirag-Guneshli oilfield complex, operated by BP and Socar, is the country’s main source of oil, while the Shah Deniz gas field is one of the biggest in the world, providing more than two-thirds of national gas production. Azerbaijan ranks among the top 20 net oil exporters and the 12th largest gas producer in the world.
Despite a decline in oil production since its peak in 2010, Azerbaijan has seen a surge in natural gas production and aims to increase production by 35 percent by 2034. As a member of OPEC+, the country views gas as a transitional energy source as nations seek to reduce carbon emissions. Baku hopes to capitalize on falling Russian gas exports due to international sanctions tied to the Ukraine conflict, positioning itself as a preferred gas supplier to Europe through the Southern Gas Corridor network of pipelines connecting Azerbaijan to Italy via Georgia and Turkey.
Azerbaijan’s hydrocarbon industry has deep roots in the region, with Marco Polo mentioning a gushing “oil fountain” in the Caucasus as he traveled along the Silk Road in the 13th century. The Zoroastrian Ateshgah temple near Baku, with its ever-burning fire, symbolizes the natural gas and crude oil that once seeped from the ground around the capital. Today, Azerbaijan continues to benefit from its rich oil and gas reserves, with offshore deposits in the Caspian Sea driving the country’s energy sector and economy.
In conclusion, Azerbaijan’s early legislative elections highlight the country’s dependence on oil and natural gas revenues. With a rich history in the hydrocarbon industry, Azerbaijan has become a major player in global oil and gas production. As the country looks to expand its gas production and position itself as a key supplier to Europe, it remains a crucial player in the energy market. Despite challenges such as declining oil production and geopolitical pressures, Azerbaijan’s hydrocarbon industry continues to drive its economy and shape its future.
