Azerbaijan Discusses Output Cuts with IOCs [UPDATE]
Azerbaijan's national oil firm Socar on April 14 held negotiations with 14 upstream companies on implementing the country's share of Opec+ cuts, the company told NGW. The parties discussed which fields would cut their production and by how much, with the aim of minimising the economic impact of the reductions.
Socar's partners agreed to respond to the company's proposals within a week, informing it what cuts were possible.
Opec+ agreed on April 13 to cut oil supply by 9.7mn b/d in May and June. Azerbaijan has committed to keeping its output in May and June at 23% below the level in October 2018 of 718,000 b/d. This means it will flow no more than 554,000 b/d of oil during those two months. In reality, Azerbaijan is having to make a cut greater than 23%, as its output in March averaged 763,900 b/d.
The BP-led Azeri-Chirag-Gunashli (ACG) fields in the Caspian Sea are by far Azerbaijan's biggest source of oil, delivering 535,000 b/d of supply in 2019, equivalent to 70% of the national total. It also delivered 2.1bn m³ of gas, the rest being reinjected.
BP's partners in the project are Socar, US majors Chevron and ExxonMobil, Japan's Inpex and Itochu, Norway's Equinor, Turkish Petroleum (TPAO) and India's ONGC Videsh. On April 16, Chevron announced the sale of its 9.75% interest in ACG and its 8.9% interest in the Baku-Tbilisi-Ceyhan oil pipeline, also in Azerbaijan, to MOL Hungarian Oil and Gas PLC for a total consideration of US$1.57bn. BP declined to comment to NGW on output reductions for the time being.
Another major producer of liquids is the BP-operated offshore Shah Deniz gas field, which flowed an average 78,400 b/d of condensate in 2019. The UK major is joined there by Socar, TPAO, Malaysia's Petronas, Russia's Lukoil and Iran's Nico.
Other sources of supply include the offshore Bahar and Gum Deniz fields operated by US-based Greenfields Petroleum, the offshore Umid-Babek block controlled by Socar and London-based Nobel Upstream, and three onshore fields that Canada's Zenith Energy operates but is in the process of transferring back to Socar. Socar also produces oil at a number of mature fields on its own.