Azerbaijan Breaks Down Production Cut
Azerbaijan state oil producer Socar outlined on April 30 how the country's output cuts under the Opec+ deal would be shared among its producers. The group has agreed to produce less oil from May 1.
The country has pledged to cut oil production in May and June to 554,000 b/d, down 164,000 b/d from a baseline level in October 2018 and down 96,000 b/d compared with the current level. The cap will be eased to 587,000 b/d in July through December 2020 and 620,000 b/d between January 2021 and April 2022.
Azerbaijan has been restricting its supply for more than three years as a member of the Opec+ group, but it has never before asked the ACG consortium to take part, because of the project's importance to the Azeri economy.
The cuts only apply to oil and not gas condensate, meaning the BP-operated Shah Deniz gas field, which produced 78,400 b/d of condensate last year, will not be affected.
The Azeri-Chirag-Gunashli (ACG) oil project led by BP will bear the lion's share of the cuts – 76,000 b/d in May-June, 49,000 b/d for the rest of the year and 23,000 b/d in 2021 and early 2022. BP's partners include Socar, US major ExxonMobil, Hungary's MOL, Japan's Inpex and Itochu, Norway's Equinor, Turkish Petroleum (TPAO) and India's ONGC Videsh
ExxonMobil, which is seeking to sell its stake, strongly opposed the proposed cut, a source familiar with the matter told NGW, while BP insisted on a smaller reduction next month of only 65,000 b/d. After a week of negotiations, however, BP agreed to 76,000 b/d, the source said.
Azneft, a production arm of Socar, will reduce output by 17,000 b/d in May and June, 12,000 b/d in June through December and then 6,000 b/d, while other international oil companies will reduce production by 3,000 b/d, and then by 2,000 b/d and then 1,000 b/d.