Petrol station SOСAR

Petrol station SOСAR

In March 2020, the world was shaken by the strongest drop in world oil prices (by more than 53%, the largest in 18 years), and as a result, prices for fuel produced in North America fell, and exporters of various fuels in Europe and Asia enjoy this situation.

So, in Belgium, gasoline and diesel fuel prices fell by 19% and 13%, respectively, and in France, Germany and Georgia - by an average of 10%.

As for the oil-producing countries of the CIS, they are not in a hurry to reduce the prices of domestic fuel, an important component of the revenue side of their state budgets, but recognize that their consumption in the domestic market has decreased due to a decrease in business activity due to the Corona Virus COVID-19.


The main types of gasoline produced in Azerbaijan at the only Heydar Aliyev refinery in Baku are AI-92 gasoline (Octane 92) and diesel fuel (Euro-4).

Gasoline is fully sold in the domestic market, and more than half of the diesel fuel is exported.

In 2019, the refinery produced 1.16 million tons of AI-92 (a decrease of 2.1% compared to 2018) and 2.113 million tons of diesel fuel - an increase of 8%.

In January-February 2020, the production of gasoline amounted to 230 thousand tons (an increase of 15.1% compared to the two months of 2019), and diesel fuel - 371.8 thousand tons (an increase of 9.5%).

However, taking into account quarantine restrictions introduced in Azerbaijan in March due to COVID-19, it is clear that the consumption of these fuels in the country will decrease.

As an informed source in SOCAR told ASTNA, Azerbaijan is not going to export surplus gasoline.

“We’d better make stocks of gas in the fall, because traditionally, in October, the Aliyev refinery gets undergoing monthly scheduled repairs, in connection with which SOCAR has to import AI-92 in the amount of 80-100 thousand tons to cover the temporary seasonal shortage,” the SOCAR representative noted.

As for diesel fuel, it is still well in demand in the markets of the Black and Mediterranean Seas, as sowing campaigns are coming, as well as in Europe cargo transportation is not reduced (diesel fuel is used for heavy trucks).

According to the economist Gubad Ibadoglu, "the decline in world prices for oil and oil products should affect prices in Azerbaijan itself."

“AI-92 gasoline and diesel fuel in Azerbaijan should become cheaper. Otherwise, it turns out that SOCAR reduces the price of its fuel in foreign markets, but does not reduce it domestically, and compensates for this difference at the expense of local consumers,” Ibadoglu noted.

Note that in Azerbaijan AI-92 is currently sold at 90 kopecks per liter, and diesel fuel – at 60 kopecks per liter ($ 0.35), and in Azerbaijan diesel fuel is one of the cheapest in the CIS.

In Europe, the average price per liter of diesel fuel is $ 0.9-1.55 per liter, depending on the taxes of a particular country.

Azerbaijan imports AI-95 and AI-98, as only in 2021 the corresponding production facilities will appear at the refinery, which will allow the country as a whole to produce 2.2 million tons of AI-92/95/98 gasoline per year according to the Euro-5 standard.

Also in 2021, the refinery plans to launch production of Euro-5 diesel fuel in the amount of 2.9 million tons per year.

In the meantime, Azerbaijan imports AI-95 and AI-98, and a decrease in world prices for these petroleum products in Europe of $ 0.6-1.6 per liter (depending on state tax laws) allowed Azerbaijan to bring it to the country in 2020 and sell it cheaper than before (a liter of Premium Euro-95 gasoline in Azerbaijan fell in price to 1.2 manat from 1.5 manat, and Super Euro-98 to 1.4 manat from 1.6 manat).


To answer this question, you should take a tour to 2017, when by the decision of the Tariff Council of Azerbaijan (under the Ministry of Economy), the retail price of AI-92 gasoline increased from 0.7 manat to 0.9 manat per 1 liter.

We emphasize that the price of AI-92 gasoline in Azerbaijan is not regulated by the market, but is always set by the state.

On that remarkable July day of 2017, the Tariff Council justified its decision to increase the domestic prices for the most popular brand of gasoline.

“Azerbaijan seeks to improve the quality of engine fuel produced, improve the environment, expand investment opportunities to meet domestic demand, and modernize and reconstruct refineries. In addition, the devaluation of the manat (which was in 2015) led to a limitation of SOCAR's export opportunities and state revenues in foreign currency,” the Tariff Council’s decision said.

As a representative of the Ministry of Economy of Azerbaijan told ASTNA, “a government working group, including experts from the oil industry, the Ministry of Economy, the Ministry of Finance, and the CBA, is currently assessing the impact of damage from COVID-19 and low world oil prices on the country's economy, and possibly “In April, it will become clear whether any prices set by the Tariff Council will change or not.”

The CBA is already indirectly recognizing the pressure on the manat due to a decrease in the country's foreign exchange earnings, but so far it is maintaining the rate at 1.7 manat per $1.

To reduce the hype among the population, the State Oil Fund of Azerbaijan had to sell about $ 1.5 billion at foreign exchange auctions by the Novruz Bayram holiday, from March 10 to 19, i.e. almost a quarter of the total annual transfer of SOFAZ to the state budget, the conversion of which this Fund conducts through CBA auctions (since 2016).

Important is the recent statement by the reputable international agency Moody’s.

“The stability of the Azerbaijani manat is supported by sales of foreign currency from the State Oil Fund. However, if oil prices remain at current record low levels for a long period, the Azerbaijani government will face the need to devalue the national currency,” the rating agency’s report said.

Note that the price for Azeri Light is tied to the price for the reference Brent, which fell to $ 26-28 per barrel.

The budget of Azerbaijan and the budgets of SOFAZ and SOCAR for 2020 are calculated from the oil price of $ 55 / barrel.

So is it any wonder that the domestic price of gasoline is not falling?

Moreover, the phrase “a decrease in the country’s foreign exchange earnings” highlighted in the text actually means that there is a precedent when the Azerbaijani government decided to increase the domestic price of gasoline to correct the crisis with the budget.

It is still difficult to talk about whether the authorities will take advantage of this precedent.

The situation may clear up in April.

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İran Prezidentinin həlak olduğu hadisə Azərbaycan- İran münasibətlərinə təsir edə bilərmi? – Nəsimi Məmmədli Çətin sualda

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