State Oil Company of Azerbaijan has declared force majeure on some shipments of Azeri crude from the Baku-Tbilisi-Ceyhan oil pipeline following partial shutdown of a large oil field in Azerbaijan, a source at the state oil company told Dow Jones Newswires Tuesday.
"We declared force majeure to our clients, which may lead to certain delays in fulfilling the contracts," the source at SOCAR said, the declaration would legally protect the company from some of its contractual obligations to buyers. "This is not a global force majeure," the person added.
However, a spokesperson for SOCAR denied the move, and a BP PLC (BP) spokesman in Azerbaijan said the company wasn't aware of any declaration of force majeure on shipments.
Two platforms on the Azeri-Chirag-Gunashli field were shutdown last week, cutting output from 850,000 barrels of oil a day to 350,000 barrels a day. All personnel were evacuated from the West Azeri platform last week when a gas leak was detected nearby. The Central Azeri platform was evacuated as a precaution.
"Two thirds of production is shut down and no time period has been given for repairs," says one trader of Mediterranean crude, based in Switzerland, "so we expect 5-8 cargoes of Azeri in the second half of October for sale - mostly third decade."
"I heard that because of this gas leakage, two platforms had been shut down, and therefore production reduced down to 300,000 barrels a day and 10 days delays," said a second crude oil trader following disruption to flow along the BTC pipeline.
Traders added, however, that while prices for sweet crudes in Europe remain under pressure, the disruption to flow of Azeri is unlikely to lift prices.
BP is the ACG field operator with a 34.1% stake. Other shareholders include Chevron Corp. (CVX) with 10.2%, SOCAR with 10%, INPEX with 10%, StatoilHydro ASA (STO) with 8.6% and Exxon Mobil Corp.(XOM) with 8%.