According to the Oil and Gas Journal, Azerbaijan has proven Natural Gas reserves of roughly 30 trillion cubic feet (Tcf), and BP estimates the country has 48 Tcf of proven reserves. In 2004, state statistics showed that the country extracted 177 billion cubic feet (Bcf), a 4.4 percent increase from 2003. Roughly 77 percent of natural gas production in Azerbaijan is produced by Azneft, a SOCAR subsidiary, and the rest is produced by joint ventures (the largest of which is AIOC). State officials project that Azerbaijan will produce up to 390 Bcf by 2008. But until the requisite infrastructure is completed (see Natural Gas Trade), natural gas is being flared off instead of being piped to markets. As a result, Azerbaijan is currently importing roughly four times more natural gas than it was in 2001. Besides higher economic growth rates, one main cause of the newfound natural gas dependency is that oil-fired power plants have been converted into gas-fired ones. This has forced Azerbaijan to import roughly 160-175 bcf per year from Russia at a price of $1.70 per 1,000 cubic feet (mcf), up from $1.47 per mcf in 2004. Virtually all of Azerbaijans natural gas is produced from offshore fields. The countrys leading natural gas producer, the Bakhar oil and gas field, is located off the southern tip of the Absheron Peninsula and currently accounts for slightly over half of the countrys natural gas output. Output at Bakhar has been declining in recent years, and according to press reports, SOCAR has begun efforts to develop a new deposit, known as Bakhar-2 located adjacent to Bakhar. SOCAR reportedly has plans to utilize some of the Bakhar-2 natural gas production for export in the near future. In just the past year, SOCAR completed construction of a $29 million Bakhar-Neftyaniye Kamni Pipeline, which it hopes will help double gas transport from the Gunashli field by 2010. Planned capacity is roughly 194 million cubic feet/day (mmcf/d). Production from the Gunashli field accounts for approximately 50 percent of the natural gas produced in the country. Over the next 10 years, SOCAR plans to invest $224 million to expand natural gas production (see Fig. 2) in Azerbaijan by drilling 23 gas wells in the shallow-water Gunashli field, by expanding existing platforms, and by building underwater gas pipelines. The company hopes this will help increase production to around 330 bcf/y by 2010.