BAKU

Azerbaijan is set to increase oil production by 7,000 barrels per day (bpd) in January next year to 661,000 bpd under a fresh decision made by the OPEC+ group of oil-producing nations that Baku has welcomed.

As the COVID-19 pandemic disrupted production as well as demand for oil, OPEC+, a group of the Organisation of the Petroleum Exporting Countries (OPEC) and allied producers of which Azerbaijan is a member, cut output by a little more than 7 million bpd to support prices and reduce oversupply. Other former Soviet oil-producing countries, Russia and Kazakhstan, are also OPEC+ members.

In April 2021, members of the group agreed to ease cuts gradually by 350,000 bpd in May, another 350,000 bpd in June and around 450,000 bpd in July.

In July, OPEC+ ministers decided to increase total production from August by 400,000 bpd every month and later by another 400,000 bpd from October. It has been made amid a rising number of COVID-19 infections across the world and firm prices on oil markets.

The new deal agreed last week envisages a further increase by another 400,000 bpd “until the parties agree to lift the restrictions”.

Azerbaijan’s Energy Ministry welcomed the decision and is now scheduled to produce 661,000 bpd in January.

“The OPEC+ plan to gradually increase oil production from August 2021 contributes to the balance in the market and we are moving in the right direction,” Parviz Shahbazov, the country’s energy minister, was quoted as saying by his press service.

The country’s oil production in October was below the country’s quota under OPEC+ commitments at 640,000 bpd and down from 586,200 bpd produced in August. Production of oil and gas condensate in October was 704,400 bpd. Output figures for November have not been released yet.

Azerbaijan reduced total oil and gas condensate production by 0.3 percent year-on-year to 28.8 million tonnes in the first ten months of this year.

Most of Azerbaijan’s oil production comes from the giant offshore Azeri-Chirag-Guneshli (ACG) oilfields, developed by a BP-led consortium. The country uses the Baku-Tbilisi-Ceyhan (BTC) pipeline via Georgia and Turkey to export oil from the ACG. It also exports oil through the Baku-Novorossiisk pipeline via Russia, the Baku-Supsa pipeline via Georgia and by rail in Georgia.

BP said in August that oil output at its projects in Azerbaijan declined to 468,000 bpd in the first half of 2021 from 498,000 bpd a year earlier.

In 2020, Azerbaijan produced 34.585 million tonnes of oil and gas condensate, while natural gas output was 36.713 billion cubic metres (bcm).