Baku irked over poor production at BP field

Baku irked over poor production at BP field

BAKU - The Associated Press
Baku irked over poor production at BP field

BP leads an international consortium in Azerbaijan including TPAO. REUTERS photo

Azerbaijan’s top energy official has urged further scrutiny of the international consortium developing the Caspian Sea nation’s main oilfield, amid mounting irritation at a slump in output, the Associated Press reported on Oct. 15.

The drop-off in production in recent years at the Azeri-Chirag-Guneshli project is “abnormal,” Industry and Energy Minister Natiq Aliyev said yesterday.

Errors on the part of AIOC, the field-development consortium led by BP, had cost the oil-dependent country $8 billion in lost revenue, President Ilham Aliyev said last week. The sharp tone of that statement stoked speculation of increasingly punitive conditions for international investors, as the government seeks to maintain state expenditures despite stagnating energy revenues.

BP controls a 35.8 percent stake in the project, while SOCAR holds 11.6 percent and Chevron 11.3 percent. The other current shareholders are ExxonMobil, Norwegian state-controlled oil company Statoil, Inpex and ITOCHU of Japan, Turkey’s TPAO, and New York-based Hess Corp.

The development may overshadow BP’s interest in the Trans-Anatolian Natural Gas Pipeline, a joint venture between TPAO and SOCAR. In August the head of BP’s Turkey unit, Bud Fackrell, had indicated that BP was interested in taking part in the project by acquiring some of SOCAR’s share in it. TANAP is a $7 billion planned project to carry Caspian gas to Turkey and European markets. The two countries are already connected by the Baku-Tblisi-Ceyhan (BTC) oil pipeline, which carries Azeri crude to Turkey’s Ceyhan Mediterranean oil hub.

Frustration in Azerbaijan has also been sharpened by the discrepancy between production and BP’s own forecasts. “We see large numbers that are significantly different from those planned, which means either that the project was conceived improperly or that the activities being carried out to stabilize oil production are insufficient,” Aliyev said, speaking at an energy conference in Baku.