Azerbaijan plans to build a $4 billion oil refinery by 2018 to process Kazakh crude oil, an official of Azerbaijan's state oil company told an energy conference Thursday.
Vidadi Rustamov, deputy head of operations at State Oil Company of Azerbaijan Republic, or SOCAR, told reporters that the planned refinery would process 15 million metric tons of Kazakh crude oil annually.
"The Kazakh focus of the planned refinery is logical," Rustamov said. "Oil output at Azeri-Chirag-Gunashli (field in the Caspian Sea) will drop to 35 million-40 million tons a year by 2018."
Rustamov said that the refinery would be specially designed to process Kazakh oil, which is not as light as Azeri oil and contains higher concentration of sulfur.
He said that Azerbaijan's totally liquid hydrocarbon production would total 45 million-50 million tons a year in 2018, which wouldn't be enough to fill the pipelines of Baku-Tbilis-Ceyhan and Baku-Supsa. The combined shipping capacity of the two pipelines is 56.5 million tons a year.
Rustamov said Azerbaijan will produce 50 million tons of oil this year.
Kazakhstan, developing giant oil deposits in the northeastern part of the Caspian Sea, is looking to boost its annual crude oil output to 100 million tons, or 2 million barrels a day, by 2015.
Natural resource-rich Kazakhstan aims to ship most of its increased output through the Caucasus route that goes through Azerbaijan and Georgia.
Kazakhstan expects its largest oil field Kashagan, an offshore development in the Caspian Sea, to start commercial production in 2013. The field's target production is 1.5 million barrels a day.