Trend of Decline in Azeri Oil Export

Trend of Decline in Azeri Oil Export

CESD Forecasts decline in oil output by 5,0 % in 2013

Azeri oil export declined by 15.3% in January 2013 compared with the previous month according to State Oil Company of Azerbaijan (SOCAR). The company reports that it exported 1.67 million tons in January 2013 (compared to 1.976 million tons in December). Last year’s highest export occurred in July (2.36 million tons).

In January 2013, 2,629 tons of oil was exported via Baku-Novorossiysk; 242,339 tons via Baku-Supsa; and 1.439 million via Baku-Tbilisi-Ceyhan (BTC). “Over 2012, it was exported 25.006 million tons of oil, including 2.06 million tons via Baku-Novorossiysk, 2.7 million tons via Baku-Supsa and 20.199 million tons via BTC,” – SOCAR reported. SOCAR says that the MEOD exports both its own oil and oil falling on the share of the government within PSA contracts.

The put 2013’s projections in perspective, SOCAR’s oil products export dropped by 14.1% in 2012, as well – down from 1,448,068 tons in 2011 to 1,243,742 tons last year.

CESD’s assessment model also forecasts decreasing of oil production in Azerbaijan. 50,8 million tons oil in 2010, 45,6 million tons in 2011 and 43,9 million tons last year, which was 6,9 million ton less than 2010’s output. Meanwhile, the latest predictions confirm that oil production will decrease to about 33 million tons 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 transfer levels persist. Maintaining such a high rate of transfers can result in negative consequences because of cutting budget expenditures due to potential lack of financial resources.

CESD is not optimistic about SOCAR’s oil output forecast for 2013, which projects an output of 44,0 million tons of oil in 2013, even though decline in this sector was already registered in the first months of year. CESD forecasts decline in oil output by 5,0 % in 2013 based on its econometric models and PSA matrix.

According to the Production Share Agreement (PSA), oil reserves turned down starting in 2011. Considering that the Azeri-Chirag-Guneshli field currently has 3 billion barrels (of the initial 5 billion) reserve, production in paying quantities from the Azeri-Chirag-Guneshli field is estimated to end in 2019 (3 billion barrel /340 million barrel annual). Given that 2010 was the peak year of Azeri oil production, the descent began in 2011. Of course, the output will not stop immediately, but its reduction by 10 percent a year will be a severe blow.

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%), ONGC Videsh Ltd. (2.36%), ENI (5%), ConocoPhillips (2.5%), Inpex (2.5%), Total (5%).

CESD, 2013

 

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