Since june 2013 oil production started going down in azerbaijan, oil production growth not expected

During 8 months, 2013 oil production in Azerbaijan decreased by 1% and totaled 29,121,300 tons.

According to the monthly oil production this year, the oil production peak was in May - 3,815,900 tons. Since that time oil production started going down in Azerbaijan - 3,687,000 tons in June, 3,668,300 tons in July and 3,653,100 tons in August.

If 123,100 tons of oil (910,000 barrels) of oil a day was produced in Azerbaijan in May, in August it was 117,500 tons or 869,000 barrels of oil. During 3 months, 2013 production decreased by 4.5% or by 5,600 tons a day.

During 6 months, 2013 Azerbaijan extracted 21,809,900 tons of oil, down 1.6% against January-June 2012. Judging by this figure, one can suppose that over 43 million tons of oil could be produced till the end of the year. However, the oil production declined in the second half of the year.

The Azerbaijani government forecasted that in 2013 oil production in Azerbaijan will total 42.1 million tons. With such a production decline it will be difficult to fulfill the forecast, which is less than last year's volume by 850,000 tons.

As Turan found out, the decline occurs mostly on the Azeri-Chirag-Guneshli (ACG) contract area. During 6 months, 2013 in average 672,000 barrels of oil a day was produced on ACG. By the end of the first semi-annual period this figure totaled 660,000 barrels a day and by early September was below 650,000 barrels. As reliable sources said, in October oil production on ACG will go down to 640,000 barrels and by the end of the year it will reach 625,000-630,000 barrels. The main reason of the production decline within the framework of the Contract of the Century is that few new operation wells have been drilled and then cannot replace the old wells, where the production rate goes down.

For this reason the new production platform Western Chirag, which will be put into operation at the end of this year, will not be able to stabilize production on the ACG contract area. Having studied the situation, the government forecasted production for the next year at 41 million tons, down 2.6% against the forecast for the year 2013.

Although the government claimed that as soon as the Western Chirag is put into operation in 2014-2015, the production will grow on ACG and a new production decline within the Contract of the Century was forecasted in 2016. However, it is impossible to stop decline of the oil production on ACG, which started in 2010, and since next year oil prices are expected to go down. The government has offered to base the next year's budget on the average annual oil price at $90.00 per barrel.-0-