Azerbaijan’s energy and climate policies dominated by gas export expansion plans
Azerbaijan's climate and renewable energy efforts are dwarfed by its gas export expansion plans.
Oil and gas exporting countries need to sell their oil above a level that will deliver sufficient returns to cover their planned government expenditures – a price known as the fiscal breakeven oil price. For producers in the Middle East and Central Asia, fiscal breakeven prices for 2025 are estimated to range from USD 37 per barrel in Turkmenistan to USD 127 per barrel in Bahrain, according to the International Monetary Fund.
For seven oil producers in the region – Bahrain, Iran, Algeria, Kazakhstan, Iraq, Azerbaijan and Saudi Arabia – their forecast fiscal breakeven prices for 2025 lie above the consensus median forecast for oil prices next year of USD 78 / barrel for Brent, according to data from Bloomberg Terminal.[1]Bloomberg Terminal data, accessed September 2024. This situation looks set to continue, as oil prices are currently forecast to fall further to USD 75 / barrel in 2026 and USD 72 / barrel by 2028.
If oil prices stay at the levels currently forecast, these countries would either need to take on additional debt to finance government spending, or cut back on planned spending and investment.
Across the Middle East and Central Asia region, nationally-owned oil companies are continuing to invest in their oil and gas production, including exploration for new sources of supply. State-owned companies from 11 countries in the region – including many facing fiscal shortfalls – are forecast to invest a total USD 4.7 billion in exploration and USD 46 billion on oil and gas production (including both existing and new projects), according to data from Rystad Energy.
Oil prices have fallen in recent months amid fears that oil markets could be oversupplied – a situation that the International Energy Agency forecasts will worsen. According to the IEA’s analysis, the world will face a “staggering” level of oversupply by the end of the decade. In early October oil prices rose in response to the risk of Israeli airstrikes on Iranian oil facilities, however even this has not completely reversed the fall in prices since the first half of 2024.
Investment in oil production and exploration is contributing to the forecast oversupply that is weighing on global oil prices. Reducing investment in oil exploration and production would be prudent, if not essential, if oil and gas producers across the Middle East and Central Asia are to meet their planned levels of government spending.
Country | Company | Exploration capex[2]Defined by Rystad Energy as “costs incurred to find and prove hydrocarbons: seismic, wildcat and appraisal wells, general engineering costs”. Data not available for companies outside the top 100 … Continue reading (million USD) | Well capex[3]Defined by Rystad Energy as “the capitalized costs related to well construction, including drilling costs, rig lease, well completion, well stimulation, steel costs and materials” and includes … Continue reading (million USD) |
Algeria | Sonatrach | 638 | 1,890 |
Azerbaijan | SOCAR | – | 1,503 |
Iran | NIOC (Iran) | 64 | 5,478 |
Kazakhstan | KazMunayGas | – | 859 |
Kuwait | Kuwait Petroleum Corp (KPC) | 222 | 8,908 |
Libya | NOC (Libya) | – | 1,528 |
Oman | Energy Development Oman (EDO) | – | 2,099 |
Qatar | QatarEnergy | 615 | 2,373 |
Saudi Arabia | Saudi Aramco | 3,241 | 17,913 |
Turkmenistan | Turkmengas | – | 740 |
United Arab Emirates | ADNOC | – | 2,920 |
TOTAL | 4,783 | 46,216 |
References
↑1 | Bloomberg Terminal data, accessed September 2024. |
---|---|
↑2 | Defined by Rystad Energy as “costs incurred to find and prove hydrocarbons: seismic, wildcat and appraisal wells, general engineering costs”. Data not available for companies outside the top 100 by exploration capex. |
↑3 | Defined by Rystad Energy as “the capitalized costs related to well construction, including drilling costs, rig lease, well completion, well stimulation, steel costs and materials” and includes greenfield and brownfield projects. |
Azerbaijan's climate and renewable energy efforts are dwarfed by its gas export expansion plans.
Extreme weather events in Argentina have been shown to be more frequent and intense because of human-caused climate change.