Last update: July 20, 2024 14:02

Newsroom logo

Azerbaijan Backs OPEC Plus Extension, Maintains 2025 Oil Production Quota

By Ilham Karimli June 4, 2024

None

The largest oilfield in the Azerbaijan sector of the Caspian Basin is the Azeri-Chirag-Deepwater Gunashli (ACG) field, situated about 100 km east of Baku. / BP

Azerbaijan has supported the decision to extend the existing “Declaration of Cooperation” of the Organization of the Petroleum Exporting Countries (OPEC) members and non-OPEC countries (collectively OPEC Plus) from January 1, 2025, to December 31, 2025.

The new quota agreement was announced at the 37th online meeting of ministers from OPEC member and non-member countries on Sunday.

The collective decision aims to maintain the current crude oil production levels in “OPEC Plus” countries next year, extend the evaluation of production indicators by three independent sources until the end of November 2025, and establish a new base level for 2026 based on these results.

Accordingly, Azerbaijan’s daily crude oil production quota will remain unchanged at 551,000 barrels next year. The next meeting of ministers from OPEC member and non-member countries is scheduled for December 1, 2024, to consider the year-long results.

The Declaration of Cooperation (DoC), adopted in 2016, facilitates coordination between OPEC Member Countries and 11 non-OPEC oil-producing nations (currently 10, with Equatorial Guinea joining OPEC in May 2017) to stabilize the global oil market.

Initiated at the Joint OPEC and non-OPEC Ministerial Meeting on December 10, 2016, the DoC’s success has led to multiple extensions. Recognizing the need for long-term cooperation, the 6th OPEC and non-OPEC Ministerial Meeting on July 2, 2019, endorsed the “Charter of Cooperation,” establishing a permanent platform for dialogue and collaboration to ensure a secure energy supply and market stability.

OPEC introduced the framework’s overarching objective as supporting sustainable stability in the global oil market through cooperation and dialogue, including at the research and technical levels, for the benefit of all producers, consumers, and investors, as well as the global economy at large.

Azerbaijan, one of the non-OPEC signatories of the DoC, has been loyal to its obligations under the document. Baku joined each quota agreement for extending the deadline on the reduction of oil production.

In March and April 2024, the average daily crude oil production in Azerbaijan was 480,000 barrels, according to a monthly report compiled by the International Energy Agency. In both months, Azerbaijan fell short of its “OPEC Plus” quota by 71,000 barrels.

Azerbaijan boasts significant oil and natural gas resources. As reported in the June 2021 BP Statistical Review of World Energy, Azerbaijan's oil reserves were 7 billion barrels at the end of 2020, representing 0.4% of global reserves and ranking 20th globally. Oil is extracted both onshore and offshore in the Caspian Sea.

The largest oilfield in the Azerbaijan sector of the Caspian Basin is the Azeri-Chirag-Deepwater Gunashli (ACG) field, situated about 100 km east of Baku. Discovered in the early 1970s during Azerbaijan’s time in the Soviet Union, the ACG field consists of multiple reservoir horizons located 2,000 to 3,500 meters beneath the Caspian seabed. In September 1994, the Government of Azerbaijan and a consortium of 11 foreign oil companies signed a Production Sharing Agreement (PSA) in Baku.

Azerbaijan’s proven natural gas reserves are estimated at 2.5 trillion cubic meters, according to the BP Statistical Review of World Energy 2021. Oil and gas extraction is anticipated to remain a significant contributor to the country’s economy in the coming decades.