Azerbaijan plans to produce less oil, more gas in 2020 - state energy firm

* Azerbaijan expects higher gas output this year

* But sees slightly lower oil production in 2020

* Aims to keep oil output stable before controlled decline

* Sees promising exploration activities

By Nailia Bagirova and Margarita Antidze

BAKU, Feb 10 (Reuters) - Azerbaijan plans to increase natural gas production this year, but slightly lower oil production due to the level of existing reserves, the vice president of state energy company SOCAR said in an interview.

Yashar Latifov told Reuters the country planned to produce 38.4 billion cubic metres (bcm) of gas this year, up from 35.6 bcm last year, and 36.5 million tonnes of oil, down from 37.5 million tonnes in 2019.

SOCAR extracts most of its oil from the Azeri-Chirag-Guneshli (ACG) fields together with foreign partners led by BP, which is also involved in producing natural gas at the huge Shah Deniz field.

Latifov said that SOCAR's own oil and gas production in 2020 was estimated at 7.6 million tonnes and 7.2 bcm respectively.

"Our task is to ensure stable oil production in the coming four to five years, and then a controlled decline, which will be managed by the planned expansion of exploration work at new and existing fields," he said.

New drilling activity at Bulla-Deniz, West Absheron, Pirallahi, Bank Darvin and some onshore sites was expected to keep oil production stable, he said.

Azerbaijan has an estimated one trillion cubic metres of reserves at its Shah Deniz gas field, the biggest in the country, and is looking for more reserves in other areas.

Latifov said that output at Shah Deniz was seen at 18.96 bcm of gas and 4 million tonnes of condensate in 2020, up from 16.8 bcm of gas and 3.7 million tonnes of condensate in 2019.

NEW DRILLINGS

After drilling the first exploratory early gas production well at Absheron, SOCAR, together with France's Total, is starting to perform a full field development study which might result in the drilling of at least three more wells, he said.

The start of production at Absheron is expected in mid-2021 and its reserves could exceed an estimated 300 bcm, allowing output at a plateau level of 5 bcm per year, Latifov said.

Azerbaijan sees further gas prospects at the Umid and Babek fields, where SOCAR works independently.

Latifov said SOCAR planned to increase gas production at Umid to 960 million cubic meters this year from 850 million cubic meters in 2019, and condensate to 143,000 tonnes from 140,000 tonnes.

The first exploration well is planned for drilling at the neighbouring Babek field at the start of 2021, he said, while appraisal well drilling at the Karabakh field together with Norway's Equinor was expected to be completed by the end of February. (Writing by Margarita Antidze; editing by Andrew Osborn and Kirsten Donovan)