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EIA lowers forecasts for Azerbaijan's oil output

9 March 2016 13:47 (UTC+04:00)
EIA lowers forecasts for Azerbaijan's oil output

Azerbaijan’s oil production will amount to 0.81 million barrels per day in 2016 and 0.8 million barrels per day in 2017, according to the US Energy Information Administration's (EIA) forecasts published in its Short-Term Energy Outlook (STEO).

The EIA earlier forecasted Azerbaijan’s oil production at 0.87 million barrels per day in 2016 and 0.86 million barrels per day in 2017.

The Agency expects the country’s oil production at 0.8 million barrels per day in Q1 and Q2 of 2016, 0.81 million barrels per day in Q3, and 0.84 million barrels per day in Q4 of 2016.

The lowest level of Azerbaijan’s oil production in 2017 will be observed in the fourth quarter – at 0.78 million barrels per day, according to the EIA’s forecasts. In Q1 of 2017, EIA forecasts the country’s oil production at 0.83 million barrels per day, in Q2 – at 0.81 million barrels per day, in Q3 – at 0.79 million barrels per day.

President of Azerbaijan’s state energy company SOCAR Rovnag Abdullayev has recently announced that the country intends to keep the oil production in 2016 at the 2015 levell.

He noted that the projects for increasing the production volume have already been suspended, stressing that the oil output won’t exceed last year’s level.

SOCAR produced 8.16 million tons of oil in 2015, compared to 8.32 million tons in 2014. In total, 41.59 million tons of oil was produced in Azerbaijan in 2015, compared to 42.02 million tons in 2014, according to the company.

The country produced around 0.8 million barrels of oil per day in 2015 while the world export production stood at 95.71 million barrels per day.

The main oil output in Azerbaijan comes from the Azeri-Chirag-Guneshli field. This offshore block produces Azeri Light oil with 0.15 percent sulfur and 35 degrees API.

The contract for the Azeri-Chirag-Guneshli development, with proven reserve of nearly 1 billion tons of oil, was signed in 1994.

Azerbaijan’s proved oil reserves amounted to 7 billion barrels at the end of 2014, according to BP’s Statistical Review.

EIA cuts crude prices forecasts

Brent crude oil prices will average $34 a barrel in 2016 and $40 a barrel in 2017, according to the EIA. These figures are $3 and $10 a barrel lower than forecast in last month month’s STEO, respectively.

The lower forecast prices reflect oil production that has been more resilient than expected in a low-price environment and lower expectations for forecast oil demand growth, the report said.

WTI crude oil prices are expected to average the same as Brent in 2016 and 2017, according to the EIA’s forecasts.

Brent crude oil prices averaged $32 a barrel in February, a $1 a barrel increase from January, the EIA said.

Oil prices fell about 3 percent on March 8. Brent was down $1, or 2.5 percent, at $39.84 a barrel. WTI price slipped $1.23, or 3.3 percent, to $36.67 a barrel.

EIA estimates that US crude oil production averaged an estimated 9.4 million barrels per day in 2015. The country’s production is forecast to average 8.7 million barrels per day in 2016 and 8.2 million barrels per day in 2017.

EIA estimates that the US crude oil production in February averaged 9.1 million barrels per day, which was 80,000 barrels per day below the January level.

Meanwhile, the price of a barrel of Azeri Light crude oil increased $0.22 to stand at $40.57 on the world markets on March 8.

AZERI Light FOB Ceyhan oil price was $39.79 per barrel on March 8, or $0.11 more than the previous price.

Azerbaijan has been producing AZERI LT since 1997 and exports it via Baku-Tbilisi-Ceyhan and Baku-Supsa pipelines, as well as by rail to the Georgian port of Batumi.

Azerbaijan also exports URALS oil from Russia’s Black Sea port of Novorossiysk. The oil is delivered there via the Baku-Novorossiysk pipeline.

The price for URALS-NOVO was $36.34 per barrel on March 8, or $0.21 more than the previous price.

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