Page 8 - FSUOGM Week 41

FSUOGM COMMENTARY FSUOGM

Disruption to Azeri exports

to conflict would have

"manageable" impact on

markets: OIES

The impact of disruptions to Azerbaijan's finances would be significant, but

the current oversupplied global market would not suffer shortages

SOUTH CAUCASUS A disruption in Azeri oil and gas exports as a Oil exports
result of the conflict in the Nagorno-Karabakh Azerbaijan pipes its oil to markets using the
region would be unlikely to have a major impact 1.2mn bpd Baku-Tbilisi-Ceyhan (BTC) pipeline
on markets, a report by the Oxford Institute for that runs to Turkey’s Mediterranean port of Cey-
Energy Studies (OIES) has concluded. han and the much smaller 100,000 bpd Western
Armenia and Azerbaijan reached a cease- Route Export Pipeline (WREP). BTC handled
fire in Russian-brokered talks on October 9, 640,000 bpd of oil last year, while WREP deliv-
but both sides have since accused each other of ered 77,000 bpd. While the bulk of this crude
serious violations and crimes against civilians. was produced in Azerbaijan, the pipelines also
There was fresh shelling in Nagorno-Karabakh took some supplies from Kazakhstan, Russia
on the evening of October 10, just hours before and Turkmenistan. A third, 105,000 bpd line,
the truce came into force, Armenian media Baku-Novorossiysk, can carry Azeri oil to Rus-
reported. Azerbaijan accused Armenia on sia’s Black Sea port of Novorossiysk but has only
October 11 of heavily shelling a residential area been used intermittently in recent years.
in Ganja, its second-largest city. Azeri authorities accused Armenia of launch-
Azerbaijan’s oil and gas export pipelines ing a missile attack on October 6, though Yere-
run fairly close to the conflict area, but OIES van has denied this and the pipeline’s operations
sees disruptions as low-risk. Furthermore, a were unaffected. Even so, a short disruption in
cut in Azeri oil supplies, which average around Azeri exports would be “easily manageable,”
650,000-700,000 barrels per day (bpd), would OIES argues.
have a limited impact on refiners, given how “The oil market is depressed, and major sup-
oversupplied the global market is at present. pliers have reined in output. In this situation,
Meanwhile Turkey, which is the biggest mar- replacing Azeri volumes either entirely or in
ket for Azeri gas, has a range of other sources part for what would probably be a short period
at hand that could replace supplies from its should be easily manageable,” the institute said.
eastern neighbour. If BTC supplies were knocked out, some

P8 www. NEWSBASE .com Week 41 14•October•2020