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by a further 400,000 barrels per day (bpd) imagine that Russia will accept the principle
Baku and Budapest discuss in March in a meeting that lasted just 16 that countries which have additional spare
minutes.
capacity can increase their production when
supply of Azerbaijani gas to as oil prices rose beyond $90 per barrel on it cannot do so,” he said.
The 23 members’ rapid decision came
The group is unlikely to be rushed
Europe the back of geopolitical concerns in the into any knee-jerk moves, though, with
Middle East and Eastern Europe. Despite the
JP Morgan’s Christyan Malek telling the
Baku hosted the second meeting of move, supply concerns are likely to linger, FT: “OPEC+ is not in any rush to raise
the working group on energy between with a Bloomberg survey suggesting that production too quickly or to backfill for
Azerbaijan and Hungary, which discussed the 13 OPEC members were only able to members that might be struggling to meet
issues of gas supplies and cooperation in the achieve a production increase of 50,000 bpd their targets, no matter the concerns over
field of renewable energy sources (RES). “The in January, as output from Nigeria rose by Ukraine or the return of $90 oil. They have a
current state and possibilities of bilateral 160,000 bpd during the month. However, the plan they want to stick to and don’t want to
energy cooperation between Azerbaijan and group actually ended up registering a drop of be seen to be pushed around.”
Hungary were discussed at the meeting,” the 90,000 bpd following the shutdown of Libya’s
Ministry of Energy of Azerbaijan said in a Sharara oilfield.
statement. The wider OPEC+ group fared even Gas price in Bulgaria falls
In particular, the parties discussed the worse, underproducing by more than
strengthening of strategic cooperation 820,000 bpd in January. 18% as of February
between the two countries within the As smaller producers struggle to raise
framework of the Southern Gas Corridor their output, Middle Eastern countries may State-owned gas supplier Bulgargaz requested
(SGC) project, the possibility of supplying need to ramp up disproportionately, with a decrease in the price of natural gas as of Feb-
Azerbaijani gas to Hungary, including LNG industry estimates suggesting that 90% of ruary 1 by nearly 18% to BGN109.88 (€56.2)
and CNG, the activities of the Hungarian the group’s spare capacity is now held by per MWh and the energy and water regulation
oil and gas group MOL in Azerbaijan, as Saudi Arabia and the UAE. The pair have body, KEVR, approved it on the same day.
well as energy efficiency and cooperation maximum production capacities of 12mn The move comes a few days after the gov-
in the field of RES. Within the framework bpd and 4mn bpd respectively, though work ernment removed Bulgargaz’s management
of the meeting, a presentation was made is ongoing in both countries to add another over its failure to import cheap natural gas
on the potential of Azerbaijan’s renewable 1mn bpd each. from Azerbaijan.
energy and projects that are planned to be According to data compiled by IGM The new price, which enters in force imme-
implemented in this direction. Energy, OPEC+’s top five producers in diately, is well below the €85 per MWh average
The head of the working group from the January were: Russia (just over 10mn cost on the European markets.
Hungarian side, Ambassador-at-Large for bpd); Saudi (just under 10mn bpd); Iraq KEVR said in its decision that it took into
Energy and Climate Dora Zombori, noted (4.3mn bpd); the UAE (2.9mn bpd) and account the prices at European gas hubs valid
that Budapest attaches particular importance Kuwait (2.6mn bpd). for January 31 and the average euro/dollar
to the development of cooperation with With Middle East oil ministers exchange rate of the European Central Bank
Azerbaijan in the field of energy. Following and executives calling out IOCs for for January.
the meeting, the corresponding protocol underinvestment in new production globally, The government is currently optimising
was signed. The next meeting of the working Goldman Sachs anticipates an oil price above KEVR, reducing the number of its members
group will take place in Hungary. Earlier $100 per barrel in Q3, noting that spare to five from nine.
it was reported that Hungary expects to capacity could reach historic lows of around
purchase Azerbaijani gas from the middle of 1.2mn bpd around that time.
the 2020s. Purchase volumes can reach up to S&P Global Platts quoted delegates as No oil found in Montenegro
2bcm per year. saying that there had been no discussion on
Hungarian Foreign Minister Péter countries using spare capacity to fill supply by Eni-Novatek
Szijjártó also arrived in Azerbaijan on 2 gaps left by others failing to reach their
February. Szijjártó wrote on his Facebook targets, with Saudi-based Jadwa Investment A test drilling carried out by a consortium
profile that on 3 February he will have this week suggesting the Kingdom’s output of Italy’s Eni and Russia’s Novatek under
dinner with Azerbaijani Foreign Minister could average 10.3mn bpd in 2022. the seabed between Bar and Ulcinj in
Jeyhun Bayramov. “Tomorrow there will While it is likely that Middle Eastern Montenegro has concluded that the area
be a meeting of the intergovernmental nations could make short-term gains – has no oil, the capital investment ministry
commission, a business forum and Kuwait and Saudi Arabia are pressing said in a statement on January 29. The
negotiations on energy issues,” he wrote. ahead with field expansion projects, both consortium is now expected to consider
domestically and in their shared Partitioned drilling at a different site.
Neutral Zone (PNZ), while Iraq has already The consortium started the exploratory
OPEC+ makes quick decision said it intends to export around 100,000 bpd drilling in March 2021 at a depth of 6,530
more in February – OPEC will need to play
metres in the sea between Bar and Ulcinj,
but adding production will be a delicate balancing act between the market and said it would last four and a half to
six months. The drilling was intended to
and its relations with Russia.
harder relationship could be strained if OPEC determine the potential of the deposit.
One of Platts’ sources said that this
Following the unsuccessful drilling,
The OPEC+ group this week agreed to members begin overproducing and claim the government should return a bank
ease their collective production restraint Russia’s share of the market. “I do not guarantee of €73mn to the consortium.

Week 05 03•February•2022 www. NEWSBASE .com P15