Significant Decline in Azeri Oil Export

Significant Decline in Azeri Oil Export

SOCAR oil export dropped 11,4 % in the firth four months in 2012

The State Oil Company of Azerbaijan (SOCAR) exported 7,016,000 tonnes of oil via the Baku-Tbillisi-Ceyhan (BTC) pipeline in January-April 2012.  SOCAR reports that the export made 1,909,000 tonnes in January, 1,359,000 tonnes in February, 1,901,000 tonnes in March, 1,847,000 tonnes in April. Compared to the same period of the last year, the export by the pipeline dropped by 824,000 tonnes. According to official reports, SOCAR’ oil export via BTC dropped 11,7 % in the first four  months of 2012.

Meanwhile, SOCAR exported 656,313 tonnes of oil via the Baku-Novorossiysk pipeline In January-April 2012. This is a drop of 54,273 tonnes over the same period of 2011. The pipeline exported 79,591 tonnes in January, 253,276 tonnes in February, 164,020 tonnes in March, 159,425 tonnes. So, SOCAR’s oil export via the Baku-Novorossiysk pipeline dropped 8,0 % in the first four months of 2012.

Here it should be reminded that SOCAR exported 1,988,000 tonnes in 2011 by the Baku-Novorossiysk pipeline, which is a drop of 252,000 tonnes compared to 2010. In 2012, SOCAR plans to export 1,700,000 tonnes of oil.

In total, SOCAR exported, 7, 672, 313 tonnes oil via BTC and Baku-Novorossiysk pipeline in the first 4 months of 2012.  SOCAR oil export dropped 11,4 % in total in the first four months of 2012 which shows dramatic decline in Azeri oil export.

Reminded that CESD stated in its November 16, 2011 report that the latest forecasting confirm that oil boom in Azerbaijan is doomed to end in a few years. Azerbaijan’s high dependence on oil exports poses a potential threat to the economy given the potential volatility in the international oil market. Oil reserves, however, started decreasing in 2011 and last year was pick in oil production. In long term, decreasing of oil output will cause tax revenues decline and budget deficits increase, driving up interest rates.

CESD assessment model also include tendency of decreasing of oil production in Azerbaijan. State Oil Company of Azerbaijan (SOCAR) produced 50 million ton oil in 2010. SOCAR targets 46 million ton for 2011 which 4 million ton less than last year’s output. Meanwhile, the latest predictions confirm that oil production will be decreased to about 33 million ton in 2015. Even with current prices of crude oil in the world market, SOFAZ’s assets will be totally spent within the budget lines if current unbelievable transfers’ level kept. Keeping such fantastic transfers can result in negative consequences because of theatrical cutting of budget expenditure lines due to potential lack of financial resources.

The BTC pipeline extends to 1768 km including 443km in Azerbaijan, 248 km in Georgia and 1076 km in Turkey. The shareholders of the BTC Co pipeline company are BP (30.1%), SOCAR (25%), Chevron (8.9%), Statoil (8.71%), TPAO (6.53%), Itochu (3.4%), Amerada Hess (2.36%), ENI (5%), ConocoPhillips (2.5%), Inpex (2.5%), Total (5%).

© CESD, 2012

 

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