Energy minister says no justification for high oil prices

/By AzerNews/

By Gulgiz Dadashova

Azerbaijan’s Energy Minister Natig Aliyev said given the cost of production in many countries, the high prices of oil in the market observed till just recently were unreasonable.

The oil price (an average of $ 110 per barrel) in the market was fixed more or less for a long period. One of the main factors contributing to this trend was the speculative activity of the market, Aliyev said on December 17.

Last oil price hike in the crude market was in mid-2008 when the figure hit $147 and then in a short period of time the figure dropped to $33-$35. The figure rise again later, but the oil prices saw 30-40 percent decrease this year in the world markets nearing a five-year low. Prices are set for the biggest annual loss since 2008.

Azerbaijan’s state oil company SOCAR reported that the price of a barrel of Azeri Light crude oil decreased $0.48 to stand at $61,91 in the world markets on December 16.

"If we take a look at the past 20 years, we can see that the oil prices have changed as sinusoid, although there were boom times as well. The price- the average of $ 110 per barrel - kept long enough [...] high prices, of course, coincided with the desire of oil-producing countries, on the other hand. I think that the price was not justifiable based on the oil production cost in many countries,” Aliyev told Trend.

The average upstream cost for oil and gas production in the United States is $33.76 per barrel, according to the Energy Information Agency’s 2009 data. The figure is $45.32 for African countries, $16.88 in Middle East and $26.64 in Central & South America.

Azerbaijan’s main export crude oil streams are Azeri BTC and Azeri Light. These two grades are fairly similar and are mainly sold to European and Asian markets. Also, the SOCAR-produced crude oil is blended in Russia and marketed as Urals blend because of its poor quality.

The average price of AZERI LT, exported from Azerbaijan via the Ceyhan, Batumi and Supsa ports to Italian Augusta port, was $65.69 per barrel on December 8-12 - $6.43 less compared with the previous week. The average price of Urals (Ex-Novo) exported from Azerbaijan via the Novorossiysk port stood at $61.84 per barrel or by $6.19 per barrel less than the previous week.

The average price of Brent Dated was $64.05 per barrel on December 8-12 -$5.72 per barrel less than the previous week.