ACG to cut output from May

Azerbaijan’s BP-led Azeri-Chirag-Guneshli (ACG) project will have to cut output sharply from May for the first time as the country moves to meet its commitment under a global deal to cut production, four sources told Reuters on Thursday.

Oil majors operating large production-sharing deals in the ex-Soviet states of Azerbaijan and Kazakhstan have been previously excluded from any government-imposed production decisions because such foreign investment is highly-prized.

Giant offshore ACG fields in the Caspian Sea will be required to cut some 75,000-80,000 bpd from May, sources told Reuters. This accounts for about 15% of ACG’s output, Reuters calculations show.

The third-largest oil producer among ex-Soviet countries, after Russia and Kazakhstan, needs to cut its oil output by a total of 164,000 barrels per day (bpd) to 554,000 bpd for two months from May under the OPEC+ deal sealed this month.

The ACG consortium reported a production of 535,000 bpd on average last year.

Azeri-Chirag-Deepwater Gunashli (ACG) field, located about 100km east of Baku is the largest oilfield in the Azerbaijan sector of the Caspian basin. The Production Sharing Agreement (PSA) was signed on September 20, 1994, in Baku. The contract covered the development of an area that covered three major oil fields in the Azerbaijan sector of the Caspian Sea – Azeri, Chirag and Deepwater portion of the Gunashli field (ACG). On September 14, 2017, the PSA was extended until 2049.

ACG shareholders are BP Exploration (Caspian Sea) Limited (Operator, 30.37%); SOCAR (25%); MOL Group (9.57%), Inpex Southwest Caspian Sea, Ltd. (9.31%); Equinor Apsheron a.s. (7.27%); ExxonMobil (6.79%); Turkiye Petrolleri A.O., (5.73%); Itochu Oil Exploration (Azerbaijan) Inc. (3.65%); ONGC Videsh Limited (2.31%).