BP expects flat output at its Azeri oil fields this year

Updated 21 March 2016
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BP expects flat output at its Azeri oil fields this year

TBILISI: British oil major BP expects flat oil production in 2016 at its Azeri-Chirag-Guneshli (ACG) oilfields in Azerbaijan, where it plans two rounds of maintenance this year, the company’s regional head said.
Production at the ACG fields, which account for most of Azerbaijan’s oil output and are operated by a consortium led by BP, totalled 31.3 million tons last year, down slightly from 31.5 million tons in 2014.
“Thanks to the operational efficiency programs we have put in place, we expect ACG production to continue to be more or less stable as it has been for the past few years,” Gordon Birrell, BP’s regional president for Azerbaijan, Georgia and Turkey, said in an e-mailed response to Reuters questions.
“I am confident ... ACG will continue to deliver competitive performance for many years to come.”
Birrell said the company planned two maintenance programs on ACG in 2016.
“The exact time of these will be announced later in the year,” he said.
BP had two sets of planned maintenance last year — in May and November.
Azerbaijan’s crude oil and condensate production in 2015 fell 0.8 percent to 41.7 million tons.
BP in Azerbaijan has adapted to low global oil prices, Birrell said. “We believe we are in good shape and have been successful in strongly adapting to the current challenging conditions,” he said.
“We have identified clear actions and have effective plans in place to increase efficiency in our operations and to effectively manage our investment in major projects,” Birrell added, without elaborating.
The price of crude has fallen to around $40 per barrel from over $110 in mid-2014, forcing many oil producers, including Azerbaijan, to revise government spending and change currency policies to soften the resultant shock to the budget.
“We expect the current challenging business environment to continue in 2016,” Birrell said.
BP had been trying to stabilize oil output in Azerbaijan, essential for the bulk of the nation’s state revenues, after President Ilham Aliyev publicly criticized the company in 2012 for failing to deliver on promises to increase output.
On BP’s other major project in Azerbaijan, the Shah Deniz gas field, Birrell said it continued to move ahead with “a number of milestones successfully achieved.”
“It is over 66 percent complete in terms of engineering, procurement and construction, and remains on target for first gas delivery (from Shah Deniz II) to Turkey in 2018 and supplies to Europe expected in 2020,” Birrell said.
He added the company had no major maintenance program for Shah Deniz this year, after such work took place last August.
Shah Deniz is being developed by an international consortium led by BP. The offshore field is estimated to contain between 1.2 trillion and 1.5 trillion cubic meters of gas.
Shah Deniz I has been pumping gas since 2006, and gas from its second stage is expected to reach Europe by 2020. Natural gas output from Shah Deniz was 9.9 billion cubic meters (bcm) last year, the same as the previous year.
Azerbaijan’s total natural gas production rose to 29.7 bcm last year, from 29.4 bcm a year earlier.


US eases restrictions on China’s Huawei to keep networks, phones operating

Updated 21 May 2019
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US eases restrictions on China’s Huawei to keep networks, phones operating

  • The company is still prohibited from buying American parts and components to manufacture new products without license approvals
  • Out of $70 billion Huawei spent buying components in 2018, some $11 billion went to US firms
WASHINGTON: The US government on Monday temporarily eased some trade restrictions imposed last week on China’s Huawei, a move that sought to minimize disruption for the telecom company’s customers around the world.
The US Commerce Department will allow Huawei Technologies Co. Ltd. to purchase American-made goods in order to maintain existing networks and provide software updates to existing Huawei handsets.
The company is still prohibited from buying American parts and components to manufacture new products without license approvals that likely will be denied.
The US government said it imposed the restrictions because of Huawei’s involvement in activities contrary to national security or foreign policy interests.
The new authorization is intended to give telecommunications operators that rely on Huawei equipment time to make other arrangements, US Secretary of Commerce Wilbur Ross said in a statement.
“In short, this license will allow operations to continue for existing Huawei mobile phone users and rural broadband networks,” Ross added.
The license, which is in effect until Aug. 19, suggests changes to Huawei’s supply chain may have immediate, far-reaching and unintended consequences for its customers.
“The goal seems to be to prevent Internet, computer and cell phone systems from crashing,” said Washington lawyer Kevin Wolf, a former Commerce Department official. “This is not a capitulation. This is housekeeping.”
Huawei, the world’s largest telecommunications equipment maker, declined to comment.
The Commerce Department said it will evaluate whether to extend the exemptions beyond 90 days.
On Thursday, the US Commerce Department added Huawei and 68 entities to an export blacklist that makes it nearly impossible for the Chinese company to purchase goods made in the United States.
The government tied Huawei’s addition to the “entity list” to a pending case accusing the company of engaging in bank fraud to obtain embargoed US goods and services in Iran and move money out of the country via the international banking system. Huawei has pleaded not guilty.
Reuters reported Friday that the department was considering a temporary easing, citing a government spokeswoman.
The temporary license also allows disclosures of security vulnerabilities and for Huawei to engage in the development of standards for future 5G networks.
Reuters reported Sunday that Alphabet Inc’s Google suspended business with Huawei that requires the transfer of hardware, software and technical services except those publicly available via open source licensing, citing a source familiar with the matter.
Google did not immediately respond to a request for comment on the new authorization.
Out of $70 billion Huawei spent buying components in 2018, some $11 billion went to US firms including Qualcomm Inc. , Intel Corp. and Micron Technology Inc.
“I think this is a reality check,” said Washington trade lawyer Douglas Jacobson. “It shows how pervasive Huawei goods and technology are around the globe and if the US imposes restrictions, that has impacts.”
Jacobson said the effort to keep existing networks operating appeared aimed at telecom providers in Europe and other countries where Huawei equipment is pervasive.
The move also could assist mobile service providers in thinly populated areas of the United States, such as Wyoming and eastern Oregon, that purchased network equipment from Huawei in recent years.
John Neuffer, the president of the Semiconductor Industry Association, which represents US chipmakers and designers, said in a statement that the association wants the government would ease the restrictions further.
“We hope to work with the administration to broaden the scope of the license,” he said, so that it advances US security goals but does not undermine the industry’s ability to compete globally and remain technology leaders.
A report on Monday on the potential impact of stringent export controls on technologies found that US firms could lose up to $56.3 billion in export sales over five years.
The report, from the Information Technology & Innovation Foundation, said the missed opportunities threatened as many as 74,000 jobs.
Wolf, the former Commerce official, said the Huawei reprieve was similar to action taken by the department in July to prevent systems from crashing after the US banned China’s ZTE Corp, a smaller Huawei rival, from buying American-made components in April.
The US trade ban on ZTE wreaked havoc at wireless carriers in Europe and South Asia, sources told Reuters at the time.
The ban on ZTE was lifted July 13 after the company struck an agreement with the Commerce Department that included a $1 billion fine plus $400 million in escrow and replacement of its board of directors and senior management. ZTE, which had ceased major operations as a result of the ban, then resumed business.
(Reporting by Karen Freifeld in New York and David Shepardson in Washington; Additional reporting by Diane Bartz in Washington and Angela Moon; Editing by Lisa Shumaker and Cynthia Osterman)