BAKU, Azerbaijan, October 26. Azerbaijan is projected to witness a 4 percent decline in crude oil output in 2023 when compared to 2022, BMI, a Fitch Solutions company, told Trend.
The company reported an 8 percent year-on-year decrease in Azerbaijani oil production between January and June 2023.
The decline in oil output can be attributed to two primary factors. Firstly, the output at Azerbaijan's primary oil field, Azeri-Chirag-Gunashli, has reached its peak. Secondly, the country's oil export channels have been disrupted due to the ongoing war in Ukraine. The war has prevented Azerbaijan from sending oil westward through the Black Sea Baku-Supsa pipeline, and the main alternative pipeline lacks the capacity to accommodate the additional volumes, as noted by BMI.
As a result, Azerbaijani crude oil output declined by 5.5 percent year-on-year in 2022, and BMI's Oil and Gas team anticipates another 4 percent year-on-year decrease in 2023. Given that the hydrocarbon sector contributes to approximately 40 percent of the annual GDP, the decrease in output and export volumes is expected to have adverse effects on the overall economy, as stated by BMI.
Oil from Azerbaijan is transported to neighboring countries and global markets through three major pipelines: Baku-Novorossiysk, Baku-Supsa, and Baku-Tbilisi-Ceyhan (BTC). Currently, transportation via the Baku-Supsa pipeline is temporarily suspended.
In addition, oil is exported by rail to the Georgian terminals in Batumi and Kulevi.
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