New SOCAR formula: from oil and gas to digitalisation and AI Analysis by Khazar Akhundov

A key component of Azerbaijan’s fuel and energy complex and the state’s largest budget contributor, the State Oil Company of the Azerbaijan Republic (SOCAR) has, over the past quarter-century, actively engaged in international transit projects while simultaneously expanding its retail and refining capacities. Notably, more than two years ago, SOCAR Green LLC was established as an important instrument for decarbonization efforts and the development of renewable energy. In recent years, the company has also been working to transform itself into an integrated energy corporation with a strong focus on digitalisation. SOCAR’s innovative development priorities were discussed at the opening ceremony of the 20th Baku Summer Energy School (BSES).

Azerbaijan is one of the leaders in the Caspian region in terms of its pace of participation in the global energy transition and the development of the renewable energy sector. In recent years, equally significant efforts have been made to turn the country into a regional digital hub: artificial intelligence (AI) technologies are being actively introduced, data infrastructure is being developed, and other components of the Fourth Industrial Revolution (4IR) are being expanded.

At the forefront of these initiatives are SOCAR specialists, who have established multifaceted international partnerships aimed at advancing these strategic areas.

As SOCAR Vice President Ziba Mustafayeva stated at the opening ceremony of the Baku Summer Energy School, organised by the Institute for Development and Diplomacy of ADA University, “SOCAR is no longer simply an oil company. We are transforming into an integrated, diversified energy company whose operations are based on artificial intelligence. The company continues to operate across all traditional segments of the oil and gas industry – exploration and production, transportation, refining, and trading – while simultaneously expanding its activities in the field of the energy transition.”

According to her, SOCAR has been implementing solar and wind energy projects for several years, exploring opportunities to further expand its activities at the regional level, and examining other areas of green energy development. The vice president also noted that in 2026 the company received the Lighthouse Award from the World Economic Forum for implementing digital technologies, automation, and AI-based solutions at SOCAR’s urea plant in Azerbaijan.

It should be recalled that during the June sessions of the Baku Energy Forum, SOCAR President Rovshan Najaf spoke about the company’s goals in developing the digital component of its operations: “The next stage for us, and for many companies in the energy sector as a whole, is entering the field of digitalisation. This is a natural outcome of the sector’s development, and in order to maintain our competitiveness in the long term, we are also investing in data centres and AI infrastructure.”

In his view, this is not merely a process of transforming an oil company into an energy company, but rather the evolution of an energy company into an organisation with a broader technological and energy ecosystem. This transformation is already having a tangible positive impact on SOCAR’s human capital.

Work in this direction is progressing at a dynamic pace. As Fariz Jafarov, Executive Director of the Centre for Analysis and Coordination of the Fourth Industrial Revolution (C4IR), noted, Azerbaijan can position itself not only as an energy supplier but also as a hub for hosting large data centres and technology companies.

This step reflects SOCAR’s transformation from an energy company into an organisation increasingly connected with computing capabilities and investments in the AI sector. In particular, speaking at an event organised by AmCham Azerbaijan in Baku, the head of C4IR noted that SOCAR plans to establish an artificial intelligence centre and a data centre in the country. A corresponding agreement was recently signed with Haimaker and Oracle.

SOCAR’s activities in these new strategic areas are being implemented most consistently in the fields of energy efficiency and decarbonization. The company was among the first in Azerbaijan to introduce energy-saving systems at petrochemical facilities, install wind turbines and solar panels at offshore and other sites, and launch a range of other low-carbon initiatives.

Furthermore, during recent UN climate conferences, SOCAR presented its strategic vision for achieving net-zero emissions by 2050 as part of its decarbonization action plan. The plan includes achieving zero routine flaring across all operational assets by 2030, completely eliminating methane emissions in the upstream segment by 2035, and significantly reducing carbon emission intensity by 2030.

Overall, SOCAR’s targets include reducing the intensity of corporate emissions by 30% compared with the 2022 baseline year and cutting total emissions by 20% by 2035. The company’s long-term goal is to achieve net-zero emissions by 2050.

A key step in this direction was the establishment by SOCAR in December 2023 of a new subsidiary, SOCAR Green LLC. The company’s responsibilities include implementing renewable energy projects, producing green hydrogen, carbon capture and storage, assisting in the development of strategic roadmaps for reducing carbon emissions nationwide, studying advanced international experience in green technologies, and adapting and implementing these solutions in line with Azerbaijan’s potential and needs.

To finance SOCAR Green’s renewable energy projects, the company issued $200 million worth of green bonds in January last year, and by June 2026, the fifth coupon payment on these securities had been made. Over the past two years, the company’s priorities have also included the use of public-private partnership (PPP) mechanisms, providing subsidies and incentives to attract high-tech companies in areas such as solar power, wind energy, and geothermal energy, as well as developing energy storage systems based on battery technologies.

Significant progress has also been achieved in international partnerships in the renewable energy sector. For example, the joint project portfolio of the UAE-based company Masdar and SOCAR’s subsidiary includes promising offshore wind energy initiatives with a total capacity of 2 GW, as well as potential projects in the production of green hydrogen, ammonia, and synthetic methane.

Similar cooperation has also been established with Saudi Arabia’s ACWA Power. In April 2024, an agreement was signed with the Saudi company on cooperation in the production and subsequent commercialisation of green fertilisers (primarily urea) within the framework of the Low-Carbon/Green Fertilisers project. The company’s project portfolio also includes agreements with ACWA Power on joint initiatives in green hydrogen production.

In addition, with the participation of SOCAR Green and the UK-based bp, the 240 MW Shafag solar power plant is being constructed in Azerbaijan’s Jabrayil district. The electricity generated at the facility will be used to supply power to the Sangachal Terminal, helping reduce the carbon footprint of Azerbaijan’s largest energy infrastructure facility.

Another promising area of cooperation is a partnership with Chinese companies. In April last year, SOCAR Green, together with the Ministry of Energy, signed a number of agreements with leading Chinese renewable energy companies. These include projects for the construction of a 100 MW floating solar power plant and a 30 MW battery energy storage system at Lake Boyukshor, the development of a 160 MW solar power plant, as well as a memorandum on research into the development of 2 GW offshore wind power capacity in Azerbaijan’s sector of the Caspian Sea.

SOCAR Green’s long-term plans include, together with the Ministry of Energy, the implementation of the country’s first geothermal energy project by 2030. As part of cooperation with the global oilfield services company Schlumberger (SLB), the company plans to assess the geothermal energy potential of Azerbaijan’s Karabakh region.

According to SOCAR Green specialists, the effective development of renewable energy generation projects in the country requires the strengthening of local expertise. This includes establishing EPC companies (engineering, procurement, and construction), O&M companies (operations and maintenance), attracting equipment manufacturers, and supporting their growth.

This is a particularly important aspect, as developing the renewable energy sector solely through imported equipment and technologies while relying on foreign specialists would result in a significant outflow of funds abroad. To prevent such a scenario, SOCAR Green, together with partners from the UAE and Germany, is implementing training programs to prepare specialists for the renewable energy sector, technical maintenance, engineering, and the broader green economy.