econd arbitral award was issued on 26th January 2021 under London Maritime Arbitration Association terms in favor of SOCAR Group.Arbitration Tribunal awarded US$ 63,000,000 in the second proceeding between SOCAR and Palmali.
SThe sum consists of amounts payable by Palmali and Mubariz Mansimov, as well as interest accrued and legal expenses and disbursements. Palmali's multi-million dollar counterclaim was entirely dismissed.
SOCAR and Palmali used to have commercial relations previously, although the two companies have never founded a joint venture. In 2018, due to Palmali’s violation of commitments, the companies, belonging to SOCAR Group initiated three arbitration proceedings against the companies of Palmali Group and Mubariz Mansimov.In the first one London Court of International Arbitration proceedings awarded SOCAR Overseas US$ 49,500,000. Thus, two out of three arbitration proceedings already resulted in US$ 112,500,000 in total being awarded to SOCAR. Third dispute between SOCAR and Palmali is also the subject of arbitration proceedings. Those proceedings have been concluded now, and the Tribunal's Award is expected.
Due to the COVID-19 pandemic the year 2020 was marked as a period of global recession, which affected SOCAR too.
Under the OPEC+ agreement, SOCAR has significantly reduced both drilling operations and its oil production. The OPEC+ production cuts supported the recovery of oil and gas prices during the year. SOCAR also managed to ensure the sustainability of business operations, both within the framework of this agreement and by applying wider optimization. This is reflected in the key production figures.
In 2020, about 56 thousand meters1 of drilling work was conducted by SOCAR. The company produced 7.4 million tons2 of oil and 7.3 billion cubic meters3 of natural gas on the fields operated. The upward trend in total gas production in the country continued, while the oil production declined, mainly due to voluntary oil output cuts imposed by the OPEC+ agreement. Compared to 2019, total natural gas production increased by about 4% to 37.1 billion cubic meters4. During the year, Azerbaijan produced 34.5 million tons5 of crude oil.
In 2020, SOCAR exported 17.9 million tons6 of crude oil. Along with the volume of oil produced by its own, the company also exports the profit shares of the government of Azerbaijan and SOCAR in oil produced by international consortiums operated in Azerbaijan.
During the year, about 12 billion cubic meters7 of natural gas was consumed in the country. Azerbaijan's natural gas exports increased8 by 16% to 13.4 billion cubic meters9. In 2020, natural gas from Azerbaijan was exported to Turkey and Georgia. On the last day of 2020 first direct gas exports to the European market via Southern Gas Corridor started.
SOCAR’s Heydar Aliyev Oil Refinery processed 5.9 million tons10 of oil while SOCAR’s Natural Gas Processing Plant’s output was 3.8 billion cubic meters11 in 2020. The volume of gas processing grew by more than 17%, amidst relative decrease in oil refining due to the lower demand for oil products during pandemic.
During the year, exports of oil and petrochemical products (including polymers) amounted to ca. 2.4 million tons12. SOCAR Polymer exported 132,5 thousand tons13 of polymer products, including a variety of high-density polyethylene and polypropylene brands. This is a 58% increase, compared to 2019. The main export markets for Azerbaijan’s polymer products are Russia, Turkey and China. SOCAR Polymer became the largest polypropylene exporter to Russia in 2020. Last year SOCAR Polymer taped into Austrian, Romanian and Georgian markets.
One of the noteworthy points is that 125 thousand tons14 of oil bitumen was exported during the year, a 10 fold increase to 2019. In the last decade, bitumen was mainly used for domestic needs. The commissioning of a new bitumen plant boosted production volumes and Azerbaijan resumed bitumen exports in 2019.
Note for editors : The figures in the text are rounded for better readability. You can find the exact figures in the footnotes.
37,344,012,000 cubic meters
437,140,900,000 cubic meters
6 17,878,048 tons
711,955,648,000 cubic meters
8Total natural gas exports are calculated on the basis of operative data and may be updated.
913,396,000,000 cubic meters
11 3,762,990,000 cubic meters
SOCAR and American Petroleum Institute signed a Memorandum of Cooperation on safety and quality of industrial processes during a videoconference on January, 13.
In his welcoming speech, President of SOCAR Rovnag Abdullayev briefed the participants of the meeting about scientific and technical advances of Azerbaijan’s oil industry in the beginning of the 20th century. He noted that the new development strategy of SOCAR necessitates an improved efficiency of management and the application of international standards: “In this context, API quickly contributes to the rapid dynamics of sustainable development and technology. The API Specification Q1/Q2 for Quality Management Standards is applied by the major international oil and gas corporations. From now on, SOCAR is going to comply with the requirements of API's advanced industry standards. That will help to protect lives and health of our employees. It will also contribute to the environmental protection and boost our operational efficiency.”
API President and CEO Mike Sommers made a presentation on API. She said that API, which celebrated its 100th anniversary in 2019, owned more than 700 standards applied in most countries around the world. The scope of API activities includes both trainings and certifications. The signing of such a Memorandum is the first time not only in Azerbaijan, but in the entire region.
The parties signed the Memorandum, which ensures the certification of SOCAR’s business units in accordance with API standards and brings the technical, quality and HSE management systems of SOCAR’s production, transportation and processing facilities into compliance with API standards as the best practice.