×

UPDATE 2-Azeri attacks BP over low oil output

* Aliyev accuses BP of "false promises" on oil output

* Could signal third battle line for oil major

* Western firms losing ground to Russians, Kazakhs

(Adds details, background) By Afet Mehdiyeva and Dmitry Zhdannikov

BAKU/LONDON, Oct 11 (Reuters) - Azerbaijan accused BP on Wednesday of making "false promises" on oil output and said the state had missed out on $8 billion of potential revenues from what is one of the company's biggest projects in the world.

President Ilham Aliyev said he would take "serious measures" - threatening a third battle front for BP as it seeks a settlement over its Macondo oil spill in the United States and is struggling over the fate of its $25 billion Russian venture.

"Azerbaijan has not received $8.1 billion in revenues," Aliyev told his government, accusing BP of "grave mistakes" in planning oil output at the Azeri-Chirag-Guneshli (ACG) fields in the past few years.

"It is absolutely unacceptable ... Investors who cannot stick to their obligations and contract terms must learn lessons. Serious measures must and will be taken," Aliyev said, according to a text posted on his website.

The comments will also concern BP's partners on the project: Exxon Mobil , Chevron and Statoil which have for years watched neighbouring Russia and Kazakhstan take larger shares in oil projects away from Western companies on accusations of contract term violations.

Aliyev said the ACG consortium had invested $28.7 billion in Azerbaijan since the 1990s and received revenues of $73 billion.

"Last month BP officially promised to me to fix these negative developments as soon as possible ... and more importantly, replace people, who made those grave mistakes. A month has passed and I don't see those promises being fulfilled," Aliyev said.

BP's spokeswoman in Azerbaijan, Tamam Bayatly, said the company remained devoted to its Azeri operations and would work with state oil company SOCAR to resolve issues.

BP is the biggest foreign investor in Azerbaijan, where it operates the 1.2 billion-tonne ACG fields and the giant Shah Deniz gas project, which supplies Turkey.

The prospect of so much non-OPEC crude ensured considerable western diplomatic support for the project, a major investment for BP.

ACG was supposed to produce more than 1 million barrels per day (bpd) after the project's third phase was completed in 2008.

However, ACG has not lived up to expectations. After hitting 823,000 bpd in 2010, output has fallen. Production averaged 684,000 bpd in the first half of this year and oil executives and diplomats told Reuters last month the challenge is now to keep output at around 700,000 bpd.

(Additional reporting by Margarita Antidze; Editing by Robin Pomeroy)

((margarita.antidze@thomsonreuters.com)(+995322999370)(Reuters

Messaging: margarita.antidze.thomsonreuters.com@reuters.net))

Keywords: AZERBAIJAN OIL/BP