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Azerbaijan Aims to Extend Oil Production Term

Azerbaijan is reducing extraction rates of its vast oil reserves in order to extend the duration of its production, the State Statistics Committee head said, a move that could lead to lower the expected economic growth in 2012.

"Azerbaijan is artificially reducing extraction of oil in order to extend terms of its production," the Committee's Arif Veliyev told reporters. "If this process continues until the end of 2012, GDP (growth) may be lower than our previous forecast," he said.'

Azerbaijan's production of oil and condensate declined in January-March 2012 after being hampered last year by repair work at some drilling platforms and refineries. Oil and condensate production in the first quarter of 2012 fell 5.8 percent year-on-year to 11.3 million tons from 12.0 million tons in the same period last year. Oil and condensate production last year fell 10.7 percent to 45.4 million tons from 50.8 million tons in 2010.

Azerbaijan earlier forecast 4.6 percent GDP growth in 2012, up from 0.1 percent in 2011. In the first quarter GDP grew by 0.5 percent. Veliyev said oil output, which makes up more than 70 percent of the country's total GDP, declined 4.7 percent in the first quarter of this year.

Azerbaijan ships its oil via five main routes: Russia's largest Black Sea port of Novorossiisk, neighboring Georgia's Supsa, Batumi and Kulevi ports, and Turkey's Ceyhan. Azerbaijan sells gas to the domestic market and to Georgia and Turkey via the Baku-Tbilisi-Erzurum pipeline, as well as to Russia.

The country expects to produce 45.45 million tons of oil and 28.28 billion cubic meters of gas in 2012. Veliyev said annual inflation in the country would be in a range of 3-4 percent, down from 7.9 percent in 2011.

Source: Reuters

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