Azernews.Az

By Ayya Lmahamad

Energy Minister Parviz Shahbazov has said that Azerbaijan has further expanded its role in the regional and global energy security system by contributing to the market balance.

He made the remarks during an interview with OPEC Bulletin.

Noting that the oil and gas sector plays a leading role in the Azerbaijani economy, the minister stated that the volume of oil produced in the country and the price of this commodity are important in terms of GDP and income generation.

“In recent years, the share of the oil and gas sector in budget revenues and exports remains high. In 2020, the oil and gas sector accounted for 29.9 percent of GDP, 56.7 percent of state budget revenues and 86.5 percent of exports,” he said.

Shahbazov added that in this sense, the achievement of stability in oil prices within the framework of the ‘Declaration of Cooperation' (DoC) over the past period has been important for strengthening macroeconomic sustainability in Azerbaijan.

“In this context, our activities have played an important role in the socio-economic development of Azerbaijan, improving the welfare of the population,” he said.

Speaking about the 'Declaration of Cooperation', he stated that it allowed some oil-rich non-member countries to join the process of taking concerted action in the interest of oil market stability for the first time.

“This initiative, a fair and creative solution in terms of taking into account the interests of market participants, was put forward by the Azerbaijani President Ilham Aliyev, in January 2016 at the Davos International Economic Forum. Since its inception in December of that year, the OPEC plus cooperation format has been a contributor to stability in the oil market,” he said.

Stating that the oil market currently has a more flexible and efficient monitoring mechanism, Shahbazov added that amid a number of influencing factors, the oil industry has been protected from recession.

“I think that the countries of the DoC have fulfilled a successful historical mission for five years to ensure the balance of supply and demand, oil price stability and common interests. Today, the oil market is more balanced than other energy markets, and this is our joint success,” he said.

At the same time, he noted that the market volatility in March-April 2020 confirmed the importance of this cooperation model and the monitoring process of OPEC and non-OPEC countries.

“The DoC countries have managed to bring the market out of the crisis by sharing the high level of commitment and responsibility. Currently, although the market situation is optimistic, it may not be sustainable. … Stability in the energy market is in the interest of each of us, and OPEC plus decisions provide the most appropriate solutions for this common interest,” he said.

Additionally, the minister expressed his opinion that the DoC platform will be needed beyond 2022 as an instrument of balance.

“Exporting countries must maintain this effective framework of cooperation and harmonize their behaviour in the oil market through mutual discussion and understanding,” he said.

Since April 2020, OPEC and non-OPEC countries have entered into an agreement on the reduction of daily oil production volume.

At the 19th Ministerial Meeting of OPEC and non-OPEC countries, Azerbaijan has supported the decision to increase daily crude oil output by 400,000 barrels per month in August-December 2021, and to extend the Declaration of Cooperation until late 2022, with partial adjustments to the base level of oil production from May this year.

That Declaration of Cooperation envisages increasing daily crude oil production volume in Azerbaijan every month from August to the end of the year and reducing the obligations related to cuts accordingly.

Moreover, from May 2022 to the end of the year, the calculation of Azerbaijan's oil production obligations will be continued on the basis of the existing base. In other words, the 718,000-barrel daily crude oil production in October 2018 in Azerbaijan will remain at the base level for determining the output level next year.

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Ayya Lmahamad is AzerNews’ staff journalist, follow her on Twitter: @AyyaLmahamad

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