Azerbaijan starts fulfilling OPEC+ deal

Azerbaijan starts fulfilling OPEC+ deal

Azerbaijan kick-started fulfilling its obligations under the OPEC+ deal to curb oil output, according to the country's Energy Ministry.

According to the ministry, the OPEC + deal obligations for OPEC members of and its allies envision a cut in oil output by 9.7 million barrels per day (bpd) from May through June, or 23% from the level of October 2018, and for Azerbaijan by 164,000 barrels.

The ministry also reported that the country's obligations provide for a reduction in oil output from the level of October 2018 (718,000 barrels per day) from July through December by 18%  or 131,000 barrels, and in April 2021 and 2022 - by 14% or 98,000 barrels.

“In accordance with the new OPEC + Declaration of Cooperation, quotas for the output curb were distributed in proportion to the production volumes of SOCAR’s oil and gas companies and production sharing agreements in our country between oil producers operating under such agreements,” the ministry noted.

“In October 2018, daily oil production at the Azeri-Chirag-Guneshli (ACG) field amounted to 567,000 barrels, at fields operated by Azneft production union – 125,000 barrels, and at fields operated by the joint ventures and operating companies – 26,000 barrels. From May through June of the current year, a decrease by 23% is expected, from July through December - by 18%, and from January 2021 through April 2022 - by 14%,” the ministry also noted.

“At the same time, it should be noted that these figures are rounded up, since the conversion rates of tons / barrel of oil from different producing wells differ, and a decrease in the volume of condensate is not included in the obligations," the ministry said.

Minister of Energy Parviz Shahbazov stated that measures to curb the daily production at the Azeri-Chirag-Guneshli field, the fields of Azneft production union, joint ventures and operating companies will contribute to the fulfillment of Azerbaijan’s obligations.

“From today in the history of the world oil industry, there starts implementation of the first major agreement on the volume and timing of production. Global oil demand is expected to fall by 15–25 million barrels per day in the second quarter of this year and by 10.3 million barrels in total for the year,” he said.

“In this situation, the fulfillment of OPEC + commitments, including Azerbaijan, will provide initial support to the oil market. The results of solidarity demonstrated at the national and global levels to stabilize the oil market will gradually affect oil prices," Shahbazov noted.

In accordance with the obligations under the agreement of the OPEC + countries, Azerbaijan should maintain the daily crude oil production from May through June of the current year at the level of 554,000 barrels, and from July through December – 587,000 barrels, in April 2021-2022 – 620,000 barrels.