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Powering Growth and Saving the Environment in Azerbaijan

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Powering Growth and Saving the Environment in Azerbaijan

Zaur Rzayev, Communications Associate in the World Bank Baku Office, offers this story.

Not long ago, Azerbaijan's national oil company SOCAR wasted nearly half a billion cubic meters of natural gas a year. That is because a lot of natural gas escapes when oil is extracted from below ground, and SOCAR failed to capture it, either releasing or burning it. In the process known as flaring, one fifth of the gas released during Azerbaijan’s oil production went up in flames.

During more than 150 years of oil production, wasting gas was not considered to be an environmental or economic problem. Consequently, Azerbaijan did not have procedures in place for recovering this valuable by-product and turning into a commodity.

That started to change when SOCAR joined the World Bank-led Global Gas Flaring Reduction (GGFR) partnership in 2008. This is a group of oil producing countries and leading oil companies working together to overcome barriers standing in the way of reducing natural gas waste.

Rafiga Huseynzade
Rafiga Huseynzade, SOCAR Vice-President

SOCAR's joining GGFR is an effort to find real solutions, not just window-dressing. And as the company expands operations beyond Azerbaijan to become a global player, reducing flaring is an integral part of SOCAR's transformation into a more environmentally responsible oil producer.

Rafiga Huseynzade, SOCAR’s vice-president for the environment, says: "We are keen to apply the best industry practices not only to gas flaring and venting reduction, but also to other environmental challenges. SOCAR and GGFR collaboration will show important results in gas flaring in the near future."

GGFR contributed its global knowledge and experience from working on reducing gas flaring in more than 20 countries. Its specialists helped SOCAR to shape the company's policy on recovering the associated petroleum gas.

Bent Svensson
Bent Svensson, GGFR Program Manager

Bent Svensson, GGFR's program manager, says that the program introduced a new concept of associated gas recovery plan in Azerbaijan. Having such a plan before starting any action for reducing flaring is critical. "This plan identifies the fields where gas flaring is happening, how much gas is flared or vented, technical options for utilization, investment needs and timeline for implementation," Svensson explained.

To prepare comprehensive gas recovery plans SOCAR needed to collect reliable data on how much gas was actually being flared. This is where GGFR's experience helped. It gave SOCAR special measuring equipment, trained the company's staff in using it, and guided them through extensive field measurements. As a result of this work, by the end of 2010, SOCAR managed to reduce associated petroleum gas flaring and venting almost by half—to less than 300 million cubic meters.

Some of Azerbaijan's major offshore oilfields are operated by a consortium of international oil companies which is led by BP, also a member of GGFR. The partnership was helpful in fostering dialogue among BP, the Government of Azerbaijan and SOCAR about the costs of gas flaring and the need to step up recovery actions.

Mark Thomas
Mark Thomas, VP, BP Azerbaijan

Mark Thomas, BP's vice-president for operations in Azerbaijan, Georgia and Turkey confirms that "a partnership is required between operators like BP and host governments in order to be truly effective in reducing flared volumes of gas." This partnership has helped achieve a 45 percent reduction in flared gas volumes over the past three years in the fields operated by BP.

When fully implemented, Azerbaijan's new associated gas recovery plan will put 1.6 billion cubic meters of natural gas to productive use in five years. This will power Azerbaijan's economy and development. More importantly, it will assure a cleaner environment for generations of Azerbaijanis.

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