SOCAR expects growth despite volatility in oil market

10 March 2020 20:40 (UTC+04:00)

 

By Ofeliya Afandiyeva

The State Oil Company of the Azerbaijan Republic (SOCAR) expects a growth in its oil production in 2020 compared to the results of 2019, Deputy Head of SOCAR’s PR and Event Management Department Ibrahim Ahmadov has said.

“The trend in previous years is expected to continue in those fields. Thus, we expect stabilization of the oil production level and possibly, some increase as compared to the previous year,” the official stated regarding with the latest lower prices in the oil market.

“In general, there is a significant increase in natural gas production in the country. This trend will continue in the near future,” Ahmadov noted.

He added that the average price of Azerbaijani oil (CIF) at the point of departure was about $67 last year and about $63 over the first two months of 2020.

According to him, last year the average price of Azerbaijani oil (CIF) at the point of departure was about $67 per barrel, while in the first two months its price was determined $63 per barrel.

In addition, Ahmadov commenting on the results of the recent OPEC + meeting, said that the OPEC + format was not exhausted, despite the sides’ failure in reaching consensus, which led dramatic drop in oil prices.

“Experts believe that the goals of this format are still relevant. The participants intend to jointly regulate the oil market and prevent long-term decline in oil prices. Along with it, some members in the bargain may think it is advisable to short-term decline in oil prices,” the official noted.

He added that SOCAR has not invested in unconventional oil production in recent years and all the company's investments are focused on the development of oil refining and petrochemical complexes in Azerbaijan and abroad.

“This has helped us to balance our business portfolio. Thus, margins in oil refining and petrochemicals will increase even though there is a loss in crude oil sales due to low prices. Thus, over the past decade, SOCAR has done significant work to achieve the stability of operations and reduce the dependence of total profit on one type of product. In general, I believe that the OPEC+ format will remain relevant in the future. The issue of joint quotas for restricting oil production in accordance with market demand may be raised again,” he concluded.

OPEC countries recommended an additional reduction in oil production by 1.5 million barrels per day until the end of 2020. However, at the March 6 meeting, the OPEC+ countries failed to agree on either an additional reduction or extension of transactions under the current conditions. As a result, on April 1, 2020, the restrictions will expire.

At the VII meeting of the OPEC and OPEC+ ministers (oil exporting countries that are not members of the OPEC organization), on December 6, 2019, a decision was made to reduce OPEC+ oil production by 500,000 barrels per day. In accordance with the new "declaration of cooperation", Azerbaijan’s obligations were increased by 7,000 barrels and determined at the level of 27,000 barrels. Until the end of the first quarter of 2020, Azerbaijan should maintain daily oil production in the amount of 769,000 barrels.

As it was reported, the current price for Azeri Light crude oil fell $10.54 or 22.35% percent and was determined at $36.62 per barrel.

Note that the minimum price for Azeri LT CIF oil was recorded in December 2001 ($19.15) and the maximum price was in July 2008 (US $149.66).

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