Today.Az » Business » Nation's oil production sees slight decline in 2019
13 January 2020 [16:51] - Today.Az
By Abdul Kerimkhanov
The volume of Azerbaijan’s daily oil production decreased by 3.6 percent to drop to 764,000 barrels year-on-year in 2019, the Ministry of Energy told local media on January 13.
In 2018, the country was producing 792,600 barrels of oil per day.
The reduction in oil production has to do with Azerbaijan’s commitment to OPEC.
The 15-member OPEC cartel signed an agreement in December 2018 to reduce its output by 800,000 bpd, while non OPEC countries agreed to contribute a 400,000 bpd reduction. Following the 6th OPEC and non-OPEC Ministerial Meeting, held in Vienna on 2 July 2019, the agreement on limiting oil production was prolonged until the end of the first quarter of 2020.
After the agreements on December 6, 2019, OPEC will shoulder 372,000 bpd and non-OPEC producers an extra 131,000 bpd, OPEC announced. To meet OPEC requirements, Azerbaijan must maintain the daily production at 769,000 barrels from January 2020.
Azerbaijan is one of the birthplaces of the oil industry. Its history is linked to the fortunes of petroleum. It is poised to become an important oil and gas producer once again.
Since gaining independence, Azerbaijan has signed 20 PSA contracts (requiring $60 billion investment) with foreign investors to develop its oil industry. In 1994, the country signed the "Contract of the Century with an investment of $13 billion.
In 1995, a consortium was organized, known as the Azerbaijan International Operating Company (AIOC). Originally AIOC was composed of eleven major international companies: BP (UK), Amoco (U.S.), Lukoil (Russia), Pennzoil, (now Devon of U.S.), UNOCAL (U.S.), Statoil (now Equinor of Norway), McDermott (U.S.), Ramco (Scotland), TPAO (Turkey), Delta Nimir (now Amerada Hess of U.S.), and SOCAR (Azerbaijan).
Azerbaijani extended “Contract of Century” until 2050 with BP-led consortium (Azerbaijan International Operating Company) based on the amended contract for extension of Production Sharing Agreement (PSA) on development of Azeri–Chirag–Gunashli block of oil and gas fields by 2050. The new contract was signed on 14 September 2017 after a letter of intent for future development of the field was signed on 23 December 2016.