Page 14 - FSUOGM Week 45 2021

FSUOGM NEWS IN BRIEF FSUOGM

AZN1.4bn ($823mn) per year compared to The raised funds will be transferred to and approximately $1,243mn in capital
the forecast. the treasury account of UNG and used for expenditures were spent on ACG activities.
According to the draft law, if the selling its financial recovery in coordination with During 1Q20, approximately $399mn in
price of a barrel of oil falls to $30, the the Ministry of Finance. The company operating costs and more than $1,398mn
consolidated budget revenues may shrink undertakes to meet the financial conditions in capital expenditures were spent on ACG
by AZN5.8bn. A drop in oil prices of $15 or on time, as well as to report on the use of activities.
more from the $50 scenario over a period the funds raised. ACG field located about 100 kilometres
of more than a year and a level of additional east of Baku is the largest oilfield in the
borrowing or a transfer from the State Oil Azerbaijan sector of the Caspian basin. The
Fund, or a combination of both, is expected Number of BP employees ACG contract area is jointly owned by BP
to remain at that level for one year. In this (30.37%, operator), SOCAR/AzACG (25%),
case, the reduction of expenditures will in Azerbaijan decreases by Chevron (9.57%), INPEX (9.31%), Equinor
have to be ensured primarily by reducing (7.27%), ExxonMobil (6.79%), TPAO
investment expenditures that are not 8% (5.73%), ITOCHU (3.65%) and ONGC
protected in accordance with the budget Videsh (OVL, 2.31%).
legislation. The number of Azerbaijani employees at The $6bn project was announced
As can be seen, the low level of oil prices BP has decreased by 210 people. At the end following an agreement with the
necessitates a conservative approach to oil of the third quarter of 2021, the number Government of Azerbaijan for extending
prices when calculating budget revenues of Azerbaijani citizens working for BP was the operational life of the ACG field until
and expenditures in order to mitigate the 2,287, including fixed-term employees 2049. The project is designed to process
risk. Calculations show that if oil stays according to the company report on the 100,000 barrels per day of oil and 350mn
at $55 per barrel in 2022, it is possible results of 3Q21. scfd (million standard cubic feet per day)
to maintain a balance between SOFAZ's At the end of the 3Q20, the number of of gas.
revenues and expenditures. are used as raw Azerbaijani citizens working for BP was
materials in production. 2,497. As of mid-2018, 90% of BP's skilled
workforce is composed of Azerbaijani Gasoline, diesel prices in
nationals, whereas the unskilled workers are
Fitch affirms 100% Azerbaijani. Armenia rise nearly 45% y/y

Uzbekneftegaz’s scheduled Production at Azerbaijan's Gasoline and diesel fuel prices in Armenia
in October were up 44.1% and 43.2%,
new notes at 'BB-(EXP)' respectively, from October 2020, and by
37.8% and 44.3%, respectively, compared
Fitch Ratings has assigned a 'BB-(EXP)' ACG decreases by around to December 2020, the country’s National
expected senior unsecured rating to US 1m tonnes Statistical Committee said on November 3.
dollar-denominated notes to be issued by Fuel prices have been sharply on the
Uzbekneftegaz (UNG; BB-/Stable). Production at the Azeri-Chirag-Guneshli rise for months in Armenia. Gasoline
It said that the prospective notes would (ACG) field of Azerbaijan stood at around price increases in Armenia in the first half
generate most of the consolidated group's 126mn barrels or 17 million tonnes in of 2021 ranked first among all European
Ebitda. 3Q21, according to a BP business operations nations, at 22.8% (Georgia came second
UNG's rating is equalised with that of its report. with 17.4%).
parent Uzbekistan (BB-/Stable). UNG is a "Total production from ACG for 3Q21 Food prices have also been on their
fully state-owned integrated natural gas and - Chirag (29,000), Central Azeri (109,000), way up: reports from August suggested
liquid hydrocarbons producer with strong West Azeri (115,000), East Azeri (77,000), that they had reached a generational high
links with the government. Deepwater Gunashli (87,000) and West after a 13.5% y/y jump in July (the largest
“We view its Standalone Credit Profile Chirag (44,000) ) combined platforms - an such increase since the 1990s), while in
(SCP) at 'b+', reflecting its medium scale average of 461,000 b/d, or a total of about September they rose 15.4% y/y.
and low-cost position as well as fairly 126m barrels, or 17m tonnes," the report
high (albeit declining) leverage, regulated said.
domestic gas prices and limitations of For comparison, in 3Q20, production UK embassy says
the general operating environment in from ACG averaged 482,000 b/d, or a total
Uzbekistan,” Fitch noted. of about 132m barrels, or 17.9m tonnes. Turkmenistan has “plenty of
UNG, meanwhile, said that it is to list On September 18, 2021, the ACG project
international bonds on the London Stock celebrated the success of producing a total scope” to reduce methane
Exchange (LSE). of 4bn barrels from the field.
The $700mn issue is set to go ahead by As part of ACG's annual work program, leakage
the end of this month. The process is to be a planned maintenance program was
organised by Bank GPB, Citi, JPMorgan and implemented in 2021 on two platforms - Chargé d’Affaires at the British Embassy in
MUFG, with White & Case acting as the in West Azeri in 2Q21 and on the Chirag Ashgabat John Hamilton wrote about the
legal consultant. platform in 3Q21. At the end of the third transition to cleaner energy sources, timed
New York Mellon Bank branches in quarter, ACG operated a total of 136 oil for COP26 Energy Day on 4 November
London and Dublin will also help the production wells, 30 water injector wells 2021, noting that Turkmenistan has
company in placing the bonds, registering and 8 gas injector wells. At the end of the “plenty of scope” to reduce greenhouse gas
their issue and making payments. same quarter in 2020, ACG operated a emissions from methane leakage, flaring
As an exception, UNG is allowed to total of 124 oil production wells, 39 water and venting.
conclude contracts with them, as well as injection wells and 7 gas injection wells. Turkmenistan has been in the headlines
with the audit company EY and the LSE During the first three quarters of 2021, lately due to the detection of major methane
without state expertise. more than $398mn in operating costs leaks in the country via satellite monitoring.

P14 www. NEWSBASE .com Week 45 10•November•2021