BAKU (Reuters)—British Petroleum will have to invest billions of dollars more than previously planned if it is to slow falling output at an Azeri oil project that is also that country’s biggest economic resource, oil executives and diplomats say.
The investments required to cut the decline at the Azeri-Chirag-Gunashli (ACG) fields are so large that it may not even be commercially viable for the companies to spend the money unless they receive sweeteners from the government, the sources told Reuters.
The problems at ACG will affect international oil supplies and come as BP faces the possibility of paying out $17 billion more in fines related to the Gulf of Mexico oil spill than it has budgeted for, after the U.S. Department of Justice accused the company of gross negligence earlier this month.
ACG was supposed to produce more than 1 million barrels per day (bpd), after a third phase was completed in 2008. The prospect of so much non-OPEC crude ensured considerable western diplomatic support for the project and industry kudos for BP.
ACG is so critical to Azerbaijan that the day of the signing of the Production Sharing Agreement (PSA) covering the fields — Sept. 20 — has been designated as “Oil Workers Day” and each year, public celebrations are held in Baku on this date.
However, ACG has not lived up to expectations. After hitting 823,000 barrels per day in 2010, output has fallen.
Production averaged 684,000 bpd in the first half of this year and oil executives and diplomats said the challenge is now to keep output to around the 700,000 bpd mark.
Officials at BP and state oil company Socar say the geology of the field has fallen short of original expectations, but have cited maintenance when explaining the falls of the past 18 months.
The Aliyev dynasty has mansions all over the world, in case a quick get away is necessary.
Great news, so even the estimates that Azeri oil will be depleted by 2019 could be well wishing! They might not even pump out all the oil as it is becoming economically unviable.
little more patience on our side, and the proverbial axe (let’s call it the “Gurgen”) will fall on Aliyev’s racist head. We’ll just watch how “friends” of Azerbaijan will hapilly abandon this good-for-nothing hellhole called Azerbaijan.
OIL, OIL, OIL, if war errupts with Azerbaijan next round should be to destroy OIL instalations or invade lands with OIL, it is the only card that the Western world reacts,
I hope the oil supply dries` up,then the limmie company,bp,that Gulbenkian started,and that azerbaturk,will go back to its sewer status,like its big brother jerky turkey.
I look towards a day when the horseface Brits will pay dearly for selling Armenia to the Turks. Hopefully, they’ll choke on the damn oil. Russians and the rest of gang are not any better than the Brits.
They have already hit peak oil and they will hit peak gas in 10 years. 90% of their oil comes from 3 major oil fields in baku. 94% of their exports are petroleum based. Azerbaijan has neither the brains nor the resources to take on Armenia on even terms. Once their oil runs dry, you will see just how many nations give two bits about azergayjan anymore. I also predict their nation will fall into chaos once the idiot people realize that ALL that oil money was robbed by the aliyev mafia clan.