Azerbaijan sees less decline in 2013 oil output than initially forecast

By Lada Evgrashina

BAKU, March 13 (Reuters) - Oil output in Azerbaijan willfall again in 2013 after a 5 percent decline in 2012, but shouldexceed an initial government forecast due to BP's effortsto stabilise production, Azeri officials said.

The Azeri energy and industry minister said he expected oiland condensate output to reach 41.5 million tonnes this year, upfrom the government's forecast of 40.82 million tonnes.

"Oil output in Azerbaijan is now forecast at 41.5 milliontonnes, which is down from 43.0 million tonnes produced in 2012,but work on stabilisation of oil output is underway," NatikAliyev told reporters on Wednesday.

Extending a drop that began in 2011, oil and condensateproduction in the ex-Soviet republic fell 5.3 percent to 42.98million tonnes in 2012.

Falling oil production at the Azeri, Chirag and Guneshli(ACG) oilfields, the biggest in Azerbaijan and one of BP's largest global projects, has raised concerns and prompted President Ilham Aliyev to accuse the British major of making"false promises".

Officials at BP and Azeri state energy company SOCAR say thegeology of the country's main oilfields has fallen short oforiginal expectations and they have cited maintenance as areason behind the falls of the past 18 months.

The energy minister praised BP on Wednesday for its effortsto stabilise oil production.

"BP ... is implementing necessary works, which will give apositive result soon," Aliyev said.

Oil and condensate output declined by 3.5 percent in January2013 from a year earlier, according to the State StatisticsDepartment, but the head of SOCAR, Rovnag Abdullayev, said onWednesday that the decline was halted in February.

Abdullayev said SOCAR would present a programme to PresidentAliyev in April to increase production at oilfields where SOCARoperates without foreign partners.

"The main goal of this programme is to increase oil outputby SOCAR by 1-2 million tonnes per year thanks to use of newtechnologies," Abdullayev said.

"Part of the proceeds from a second issue of (SOCAR's)Eurobonds will be used for implementation of this programme," hesaid.

SOCAR issued 10-year Eurobonds worth $1 billion this monthfor refinancing its existing debt and funding its upstream anddownstream operations. It issued a debut Eurobond of $500million last year.

The company produced 8.3 million tonnes of oil at its ownoilfields in 2012, down from 8.4 million tonnes in 2011.

The former Soviet republic ships its oil via five mainroutes: Russia's largest Black Sea port of Novorossiisk,neighbouring Georgia's Supsa, Batumi and Kulevi ports, andTurkey's Ceyhan.