SOCAR suspends production at unprofitable oil fields over OPEC+ agreement
By Ayya Lmahamad
Azerbaijan’s State Oil Company (SOCAR) has suspended production at unprofitable fields, the company’s Deputy Head of Public Relations Ibrahim Ahmadov said in an interview with RIA Novosti.
Ahmadov stated that the production was suspended as part of the OPEC+ agreement on reduction of oil production.
However, he emphasized that the majority of oil production will remain profitable even at the low oil price level.
Moreover, he noted that the company plans to adhere to those quotas that were agreed upon in the framework of the OPEC+ initiative and approved by Azerbaijani government. Ahmadov stressed that this will help not only to stabilize the market, but also to increase the efficiency of operators by stopping the operation of fields that are unprofitable in these conditions.
He highlighted the fact that despite the reduction in oil production with the OPEC+ agreement, Azerbaijan increased its revenues from the oil sales by about two times (during the period of agreement being in force) compared to April.
Thus, the price of one barrel of Azerbaijani oil was $20.48 in April, while during June-July it was on average at $42-44.
It should be noted that in April 2020, OPEC and non-OPEC countries entered into agreement on reduction of daily oil production by 9.7 million barrels in May-June and 164,000 barrels for Azerbaijan.
According to the “Declaration on Cooperation”, Azerbaijan produced 718,000 barrels of crude oil per day in October 2018, while in May-July 2020, the country must maintain the average daily production of crude oil at 554,000 barrels.
At the meeting of OPEC and OPEC+ countries on June 6, it was decided to extend the quota until the end of July.
Azerbaijan is fulfilling its obligations under OPEC+ agreement. Thus, the average daily oil production in May amounted to 650,000 barrels, in June to 553,800 barrels and in July to 650,100 barrels.
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