UPDATE 1-BP halves Azeri oil production after gas leak

Wed Sep 17, 2008 3:30pm BST

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BAKU, Sept 17 (Reuters) - Oil major BP (BP.L) said on Wednesday it had suspended oil production at two Azeri fields due to a gas leak, effectively halving oil output from the group of giant offshore Caspian Sea deposits.

The two fields are part of the Azeri-Chirag-Guneshli (ACG) group of fields, the main source of oil for the BP-operated Baku-Ceyhan pipeline, running from the fields in the Azeri part of the Caspian Sea to the Turkish Mediterranean coast.

"A gas leak was discovered in the area of the Central Azeri platform this morning. The staff has been evacuated and the works halted," Tamam Bayatly, a spokeswoman for the company, told Reuters.

She later said that oil production was also halted at the Western Azeri field as a preventive safety measure.

The two fields usually produce in total around 470,000 barrels of crude per day, or over a half of the total ACG output of around 900,000 bpd.

Bayatly said that works would continue as normal at other fields in the deposit and exports would not be affected.

"There are sufficient volumes of oil in onshore storage at Sangachaly (near Baku) as well as in Ceyhan. Loading of Azeri Light crude in Ceyhan is continuing according to schedule," Bayatly said.

She could not say when the company planned to resume production.

ACG, which produces Azeri Light oil, a high-quality crude priced at a premium to many others, suffered a severe reduction last month after BP halted the Baku-Ceyhan pipeline for 20 days following a fire at a section in eastern Turkey.

The pipeline is seen by BP as an alternative to the Baku-Novorossiisk pipeline that takes Azeri oil to Russia, from where it is sold on to Europe.

The BP-led group has been developing the ACG deposit since 1994. It has estimated reserves at over 900 million tonnes of oil.

It increased production at the fields this year from around 670,000 bpd last year and has said it would be able to sustain peak production of 1.1-1.2 million bpd between 2009 and 2019.

BP is the largest shareholder in both the ACG fields and the Baku-Ceyhan pipeline, with stakes of 34.1 percent and 30.1 percent respectively.

BP's partners in the ACG fields include Exxon Mobil (XOM.N), Chevron (CVX.N), Devon Energy (DVN.N), Japan's INPEX (1605.T) and Itochu (8001.T), Turkey's TPAO and Azeri state oil firm Socar.

(Reporting by Lada Yevgrashina, writing by Tanya Mosolova)