Azeri oil export fall the lowest level

Azeri oil export fall the lowest level

Azeri oil exports will fall to multi-month lows in November and December which  scarce supplies of light and sweet crude grades to Europe.

A halt of supplies from Libya, production problems in the UK and Norwegian North Sea, lower supplies from Russia, central Asia, Nigeria and Angola have all cut supplies, especially of high quality, light, low sulphur crude oil.

Analysts believe a series of supply disruptions have helped keep oil strong this year despite a weakening outlook for the world economy and global fuel demand.

In a move adding to supply fears, BP said on Tuesday it was suspending production at three platforms at its Azeri-Chirag-Guneshli (ACG) Caspian oil field for up to 15 days each.

Azeri oil exports would be cut from Oct. 20 and last five weeks, said BP in Baku.

“Production from the Azeri platforms — East Azeri, West Azeri, and Central Azeri will be suspended in a planned sequence in order to enable efficient maintenance work to be undertaken,” she said.

Total production at all three platforms is at least 560,000 barrels per day, data showed.

Trading sources said on Tuesday Azeri Light exports from the Turkish port of Ceyhan might decline for a fifth straight month to as low as 18 million barrels in November from 20 million in October and as high as 27 million in October 2010.

 

“It should support prices of light grades and at least partially cushion against a general decline in oil prices,” one trader familiar with preliminary export estimates said. A final export plan for Azeri Light for November would be released in early October.

Last week, Azerbaijan slashed expectations for oil production by more than 100,000 barrels per day to 900,000 bpd for the whole of 2011 but it was not clear which months would be affected most.

Output at the Chirag oilfield, part of the BP-led ACG group, which combines three fields, was halted for two weeks for maintenance in July, shutting in output of 80,000-85,000 barrels per day.

CESD experts mentioned decline in oil production is mainly connected with potential end of oil boom in Azerbaijan: Oil production will be peaked in 2012. Starting 2013 oil production in Azerbaijan will dramatically decrease. 51 million tonnes crude oil produced in 2010 and oil production forecast for 2011 is 47,4 million tonnes. Azerbaijani oil production will be kept around 48-50 million tonnes in upcoming 2 years based on Production Sharing Agreement (PSA).

The center experts added that oil production is expected to be dropped by 40 million tonnes in 2014. Since gas revenues are expected increasing from 2017 after using second platform of “Shahdeniz Field”, there will be dramatic fall in state revenues in Azerbaijan between 2014-2017 years. Gross Domestic Production (GDP) is expected to fall around 5 % annually starting 2014. That is why SOCAR will try to apply production wall in order to keep production volume as the same level for up-coming years due to potential oil production fall starting 2013. Otherwise, dramatic decline in oil sector in up-coming years cannot be overcome.

According to official figures, extractive industries production is expected to be down 5.5 % this year since CESD forecasts 7, 0 % descend.

 

 

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