Azerbaijan to reduce dependency on imported 95-octane gasoline
By Sabina Alizade
In June 2024, the Heydar Aliyev Baku Oil Refinery (BOR), owned by the State Oil Company of Azerbaijan (SOCAR), will begin producing automotive gasoline that meets Euro-5 environmental standards, SOCAR's press service reports. This step marks an important phase in the refinery's modernization, aimed at improving product quality and reducing environmental impact.
As part of the ongoing large-scale reconstruction and modernization program at BOR, a methyl tert-butyl ether (MTBE) isomerization unit was commissioned in 2023. These technological upgrades improve the quality of produced petroleum products and increase production efficiency.
The Baku Oil Refinery has a rich history and significant experience in oil refining. Over the past 70 years, the refinery has processed 370 million tons of oil. In 2023, the refinery processed 6.3 million tons of oil, producing 1.5 million tons of gasoline. In the same year, the depth of oil processing improved to 98% compared to 96.3% in 2022.
Currently, a major modernization and reconstruction project is underway at the refinery, aimed at increasing efficiency and expanding the capabilities for processing various types of oil from the Caspian region countries. The current capacity of the refinery is 6.5 million tons per year, and after completing all modernization work planned for 2027, the refinery will be able to process oil more efficiently and in accordance with the most modern environmental standards.
A well-known expert in the oil industry, head of the Oil Research Center, Ilham Shaban , noted in an interview with News.Az that at the Caspian Oil and Gas Exhibition within the framework of Baku Energy Week, SOCAR announced that it has already started producing automotive fuel according to Euro-5 standards. "They also reported that this information was not provided to the media. This was officially announced by the State Oil Company of Azerbaijan at their stand for the public, and it became known from the presented information that in May 2023, the Heydar Aliyev refinery was already producing diesel fuel according to Euro-5 standards. However, this fuel has not yet been supplied to the domestic market," he said.
The expert emphasized that the produced diesel fuel is directed exclusively for export, while the gasoline consumed in the domestic market is imported from neighboring countries. "Apparently, after some time, Euro-5 standard diesel fuel will be directed to domestic use, and every Azerbaijani car using diesel will be able to benefit from this fuel," he added.
The expert noted that SOCAR also announced plans to start producing Premium gasoline, known to many as 95, in June. "There are no plans to produce 98 gasoline in Azerbaijan. Therefore, this gasoline will continue to be imported. However, the volume of its consumption is small. We will continue to import 98 gasoline, which accounts for only 0.03-0.04% of the total gasoline consumption in Azerbaijan, which amounts to 1.3 million tons per year," he said.
Ilham Shaban noted that after the start of production of 95 Euro-5 gasoline in Azerbaijan, it will be sufficient for the domestic market, and there will be no need to import this gasoline. "As a result, the price of 91 gasoline in Azerbaijan should decrease, and for this, the Cabinet of Ministers should make an appropriate decision. Since April 1, 2014, tariffs for high-octane gasoline in Azerbaijan are not regulated by the state. However, if market participants regulated the prices, it could be considered a market element. But since this does not happen, the Cabinet of Ministers should make changes to its decision. It should be noted that only 98 gasoline will be regulated. The second issue is the regulation of prices for 95 gasoline. If the state completely transfers this to the market, then the absence of state price regulation would be illogical," the expert added.
From an environmental perspective, the expert emphasized that the difference between Euro-2 and Euro-5 standards is significant, especially between Euro-3 and Euro-5, as the content of harmful substances in the fuel emitted into the atmosphere is much lower with Euro-5 standards. "When it rains, why do cars become dirty? It's not just dust. Part of these pollutants is related to emissions from automotive fuel," he said.
In an interview with News.Az, Doctor of Economic Sciences, Professor Elshad Mammadov , noted that the start of production of Euro-5 gasoline at the Baku Oil Refinery is a long-awaited step. "Our country is an oil-producing country . The production of a wide range of petroleum products in our country is inevitable. I believe that oil refining is our significant competitive advantage and is important for forming a competitive economy in our country. Moreover, this should have a positive impact on solving many social issues, as this is the production of high value-added products. The expansion of these enterprises' profits should positively affect the wage fund. Therefore, this is a positive development for the socio-economic agenda of the country. I believe that we should accelerate our activities in this direction," he added.
The expert noted that deepening regional economic cooperation, cooperation with post-Soviet countries and Turkey, and the implementation of regional transport and logistics projects open up great opportunities. "In this context, I believe that we should more deeply analyze the prospects of the North-South corridor. I believe that this can bring positive results in terms of sales markets for our oil refining sector, and the Zangezur corridor will undoubtedly have a positive impact on the entry of our economic resources into new markets," he said.
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