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UPDATE 1-Azerbaijan cuts 2009 oil output forecast by a fifth

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BAKU, Feb 19 (Reuters) - Azerbaijan has cut its 2009 oil production forecast by a fifth to 45 million tonnes due to problems at BP-led BP.L Caspian Sea fields and because of low oil prices, an Azeri government source told Reuters.

The source, who spoke on condition of anonymity because he is not allowed to comment on the topic, said the country had previously expected to produce 57 million tonnes.

In 2008, Azerbaijan extracted 44 million tonnes of oil.

If production stays flat this year, it would be the first time in a decade that has seen the country raise production more than fivefold.

BP in September suspended oil production at two platforms, Western and Central Azeri, of the giant Caspian Sea deposit Azeri-Chirag-Gyuneshli (ACG), due to a gas leak. It partially resumed work at the offshore platforms in December last year.

As a result, the company fell short of its production forecast of 42 million tonnes of oil from these fields.

Production has resumed at seven out of the platform’s 11 wells since December, but average production dropped to 14,000 tonnes a day, threefold less than previously, Khoshbakht Usifzade, the first vice-president of the Azeri state energy company Socar, told Reuters.

Socar is a part of the BP-led group.

“AIOC (Azerbaijan’s International Oil Company) cut the production forecast for 2009 to 36.0-36.5 million tonnes due to the fact that production from the Central Azeri was not resumed completely. It may review this indicator in a while along with resumption of all production wells,” Usifzade said.

The AIOC planned to produce more than 49 million tonnes of oil at the ACG in 2009.

Usifzade said that Socar would also cut its production to 8.5 million tonnes in 2009 from 9.3 million tonnes in 2008, citing the company’s new priority to boost gas production.

ACG is the main source of oil for the BP-operated Baku-Ceyhan pipeline, which runs from the fields in the Azeri sector of the Caspian Sea to the Turkish Mediterranean coast.

Azerbaijan, facing oil production problems, became the only non-OPEC nation to offer output cuts at the group’s meeting in December. The country said it was ready to cut output by 300,000 barrels per day to 540,000 bpd, which will be its lowest output level in two years.

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