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Subject

BP-led oil production in Azerbaijan.

Significance

Production at the major Azeri-Chirag-Deepwater Gunashli (ACG) field rose to 596,000 barrels per day (b/d) in January-June from 585,000 b/d a year earlier, according to an August 1 announcement from operating company BP. The loosened output ceiling agreed by OPEC and non-OPEC states came too late to affect the uptick, which follows last year's extension of the ACG contract, designed to revitalise investment in a field that accounts for three-quarters of Azerbaijan's oil output.

Impacts

The share of hydrocarbons in total exports will increase further with the intensification of the Shah Deniz 2 gas project.

To offset the maturing of major oilfields, Azerbaijan will continue working with foreign investors to explore and develop new deposits.

The government will encourage the entry of new companies to stimulate investment and accelerate output growth.

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