Azerbaijan's Shah Deniz gas field, a key energy asset in the Caspian Sea, is projected to see a decline in both natural gas and condensate production in 2027. According to the country's draft state budget package, condensate output is expected to drop by 0.5 million barrels, or 1.7%, while natural gas production will fall by 0.2 billion cubic metres, a 0.7% decrease compared to 2026 forecasts. This would result in condensate production reaching approximately 29.8 million barrels and natural gas output at around 26.7 billion cubic metres in 2027.
The anticipated decline in production will also impact profit tax revenues from the Shah Deniz project, which are forecast at AZN 1.42 billion ($835.3 million) in 2027. This represents an 11.3% decrease compared to the 2026 projection and a 37.2% drop from the actual revenues recorded in 2025. The budget documents attribute this decline to both lower hydrocarbon production and more conservative natural gas price assumptions, with the projected price at European trading hubs for 2027 being $30 lower than the level assumed for 2026.
The downward trend in production has already been reflected in the 2026 forecasts, which show a reduction of 3.3 million barrels, or 10.4%, in condensate production and 0.6 billion cubic metres, or 2.2%, in natural gas output compared to 2025. Production data for the first nine months of 2026 indicate that natural gas production decreased by 1 billion standard cubic metres, or 5%, while condensate output declined by 3 million barrels, equivalent to 12.5%, compared to the same period in 2025.
Despite the projected declines, Shah Deniz remains a major pillar of Azerbaijan's energy sector. The field, discovered in 1999, is a significant source of natural gas for both Azerbaijan and international markets. The production-sharing agreement covering the field was extended by ten years, from 2036 to 2046, under agreements signed in 2013. The Shah Deniz consortium includes bp, Lukoil, TPAO, Southern Gas Corridor, NIKO, and MVM, with bp operating the project.