BP expects flat output at Azeri oilfields this year

TBILISI - Reuters

REUTERS photo

British oil major BP expects flat oil production in 2016 at its Azeri-Chirag-Guneshli (ACG) oilfields in Azerbaijan, where it plans two rounds of maintenance this year, the company’s regional head said.

Production at the ACG fields, which account for most of Azerbaijan’s oil output and are operated by a consortium led by BP, totaled 31.3 million tons last year, down slightly from 31.5 million tons in 2014.

“Thanks to the operational efficiency programs we have put in place, we expect ACG production to continue to be more or less stable as it has been for the past few years,” Gordon Birrell, BP’s regional president for Azerbaijan, Georgia and Turkey, said in an emailed response to Reuters questions.

“I am confident ... ACG will continue to deliver competitive performance for many years to come.”

Birrell said the company planned two maintenance programs on ACG in 2016.

“The exact time of these will be announced later in the year,” he said.

BP had two sets of planned maintenance last year - in May and November.

Azerbaijan’s crude oil and condensate production in 2015 fell 0.8 percent to 41.7 million tons.

BP in Azerbaijan has adapted to low global oil prices, Birrell said. “We believe we are in good shape and have been successful in strongly adapting to the current challenging conditions,” he said.

“We have identified clear actions and have effective plans in place to increase efficiency in our operations and to effectively manage our investment in major projects,” Birrell added, without elaborating.

The price of crude has fallen to around $40 per barrel from over $110 in mid-2014, forcing many oil producers, including Azerbaijan, to revise government spending and change currency policies to soften the resultant shock to the budget.

“We expect the current challenging business environment to continue in 2016,” Birrell said.

BP had been trying to stabilize oil output in Azerbaijan, essential for the bulk of the nation’s state revenues, after President Ilham Aliyev publicly criticized the company in 2012 for failing to deliver on promises to increase output.

On BP’s other major project in Azerbaijan, the Shah Deniz gas field, Birrell said it continued to move ahead with “a number of milestones successfully achieved.”

“It is over 66 percent complete in terms of engineering, procurement and construction, and remains on target for first gas delivery (from Shah Deniz II) to Turkey in 2018 and supplies to Europe expected in 2020,” Birrell said.

He added the company had no major maintenance program for Shah Deniz this year, after such work took place last August.

Shah Deniz is being developed by an international consortium led by BP. The offshore field is estimated to contain between 1.2 trillion and 1.5 trillion cubic meters of gas.

Shah Deniz I has been pumping gas since 2006, and gas from its second stage is expected to reach Europe by 2020. Natural gas output from Shah Deniz was 9.9 billion cubic meters (bcm) last year, the same as the previous year.

Azerbaijan’s total natural gas production rose to 29.7 bcm last year, from 29.4 bcm a year earlier.