Page 31 - Caucasus Outlook 2025

5.3.3 Industry
The industrial sector in Azerbaijan recorded moderate growth in 2024, with overall output increasing by 1.1% y/y to AZN58.3bn ($34.3bn) by November. This expansion was driven by the non-oil and gas sector, which grew by 7.2%, while the oil and gas sector posted a marginal 0.6% rise.
The mining sector, which accounted for 64.4% of total industrial output, saw commercial gas production rise by 5.9%, offsetting a 3.9% decline in commercial oil production.
The manufacturing sector, contributing 29.8% of output, exhibited significant growth across several subsectors. Pharmaceutical production doubled, while automobile and trailer production surged by 56.6%. Other strong performers included furniture manufacturing (+40.5%), metal products (+35.7%), electrical equipment (+29.6%) and clothing production (+28.6%). However, declines were recorded in machinery production (-46.1%) and other transport equipment (-52.9%).
The utilities sector showed mixed results. Water supply and waste management expanded by 7.5%, while electricity, gas and steam production contracted by 0.9%.
Azerbaijan's industrial growth in 2024 was underpinned by strong performances in select manufacturing subsectors and rising gas production, though challenges persist in oil output and machinery production.
5.3.4 Major Sectors & Companies
The oil and gas sector remained a cornerstone of Azerbaijan’s economy in 2024, with key contributions from major projects and infrastructure. The Shah Deniz-2 project continued to play a central role, with cumulative gas production reaching 66.6bn cubic metres and 11.5mn tonnes of condensate since the start of operations in 2018. This project supports Azerbaijan’s strategic position as a key energy supplier to Europe.
The Baku-Tbilisi-Ceyhan (BTC) oil pipeline retained its significance, transporting 26.8 million tonnes of oil in January-November, accounting for 75.9% of Azerbaijan’s total oil exports. Notably, 81.8% of BTC volumes originated domestically, while the remaining 18.2% (4.89mn tonnes) came from Turkmenistan and Kazakhstan, marking a 2.3% increase in transit oil.
Gas transmission also grew, with 36.3 bcm transported through major pipelines, a 0.8% y/y rise. The Baku-Tbilisi-Erzurum South Caucasus Pipeline played a pivotal role, handling 57.2% of total gas flows (20.8 bcm), reflecting a 4.3% increase due to growing export demand from European markets.
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