Weekly digest of main events in Azerbaijan's oil&gas sector

Economy Materials 13 May 2023 11:34 (UTC +04:00)
Weekly digest of main events in Azerbaijan's oil&gas sector
Maryana Ahmadova
Maryana Ahmadova
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BAKU, Azerbaijan, May 13. This week, Bulgarian Energy and Water Regulatory Commission has issued a license to Azerbaijan’s state oil company SOCAR for gas trading.

The license will be valid throughout 10 years.

SOCAR has a long-term contract with Bulgargas for supplying 1 billion cubic meters of gas per year from Azerbaijan to Bulgaria. Earlier, on April 25, SOCAR opened its office in Bulgaria.

Meanwhile, on May 12, the leadership of the TotalEnergies met with Minister of Economy of Azerbaijan Mikayil Jabbarov within the framework of President of Exploration and Production at TotalEnergies Nicolas Terraz's visit to Azerbaijan.

The sides assessed the current level of cooperation as a successful one and agreed on expanding the relations further in such spheres as oil/gas and renewables.

It is necessary to mention that SOCAR and TotalEnergies signed an agreement on November 21, 2016, on determining the main contractual and commercial conditions of the first stage of development of the Absheron gas condensate field. The agreement on exploration, development, and production sharing in the Absheron offshore block was signed on February 27, 2009.

Meanwhile, according to the latest data published by the Ministry of Energy of Azerbaijan, gas production at the Azeri-Chirag-Guneshli (ACG) and Shah Deniz fields amounted to 400 bcm since their commissioning of them and until May 1, 2023.

As of May 1, 2023, gas production from ACG amounted to 208 bcm, Shah Deniz - 192 bcm. Gas exports from the Shah Deniz block of fields approached about 135 bcm as of May 1, 2023. Production from the ACG block of fields amounted to 6.2 million tons of oil, followed by Shah Deniz - 1.5 million tons of condensate from January through April 2023.

At the same time, daily crude oil production in Azerbaijan in April 2023 amounted to 512,000 barrels. Daily oil production, including condensate, reached 626,000 barrels.

Moreover, within OPEC+ (The Organization of the Petroleum Exporting Countries) cooperation, Azerbaijan's commitment to reduce production is 33,000 barrels per day, and the quota for daily crude oil production is 684,000 barrels.

The total oil production in the country last year amounted to 32.6 million tons, including condensate. The Azeri-Chirag-Gunashli deepwater field accounted for production worth 20.4 million tons, while the Shah Deniz field - 4.4 million tons, including condensate. In April 2023, SOCAR produced 7.8 million tons of oil, including condensate.

During the reporting period, Azerbaijan exported 26.3 million tons of oil, including condensate, 24.9 million tons of which fell to the consortium, while 1.4 million tons accounted for SOCAR.

Furthermore, according to the forecast by OPEC published this week, Shah Deniz and Absheron fields will drive liquids output in Azerbaijan in 2023. The cartel notes that Azerbaijan's liquids production decreased slightly by 14,000 b/d month-on-month in March 2023, averaging 0.7 mb/d, which is a drop of 62,000 b/d year-on-year.

At the same time, as the latest OPEC report forecasts, Azerbaijan's liquids supply for 2023 is expected to increase by 37,000 b/d to average 0.7 mb/d. The cartel says this is a downward revision of a minor 11,000 b/d, due to lower-than-expected production in major oil fields in 1Q2023.

"The main declines in legacy fields are expected to be offset by ramp-ups in other fields. Growth is forecast to come mainly from the Shah Deniz and Absheron gas condensate projects. The Azeri-Chirag-Guneshli (ACG) oil fields have seen a steady decline since 2010. However, production is expected to rise after the start-up of the Azeri Central East flank project in 4Q2023, operated by oil major bp," reads the report.