BP-led group extends Azeri oil "contract of the century"

Updated: Thu, Sep 14, 2017
09:23 pm
Reuters
RELATED NEWS
Unpaid work done by women worth 43-times Apple's annual turnover: Oxfam Unpaid work done by women worth 43-times Apple's annual turnover: Oxfam
India's richest 1% get richer by 39 pc in 2018; just 3 pc rise for bottom-half: Oxfam India's richest 1% get richer by 39 pc in 2018; just 3 pc rise for bottom-half: Oxfam
ProSieben sees pressure easing as Netflix raises prices ProSieben sees pressure easing as Netflix raises prices
Sports Direct's Ashley in talks for music retailer HMV: Sky Sports Direct's Ashley in talks for music retailer HMV: Sky
Rheinmetall plans to sue Germany over Saudi arms embargo: Spiegel Rheinmetall plans to sue Germany over Saudi arms embargo: Spiegel

BP and Azerbaijan agreed on Thursday to extend into 2050 a contract to develop the ex-Soviet state`s biggest oilfield cluster, a deal dubbed "the contract of the century" when first signed in 1994.

Under the new production sharing agreement, the Azeri state energy company SOCAR will increase its share to 25 percent from 11.65 percent, while BP`s stake declines to 30.37 percent from 35.8 percent. BP will remain the operator.

The new contract secures large investment in Azerbaijan`s oil sector for decades and a one-off bonus of $3.6 billion for the government, a welcome boost to a nation that has struggled with a sharp drop in oil prices in the past three years.

"This bonus will be paid to Azerbaijan in eight tranches in the next eight years after an agreement is ratified by Azerbaijan`s parliament," a source at SOCAR told Reuters.

The 1994 agreement to develop the giant Azeri-Chirag-Guneshli (ACG) fields in the Caspian Sea was transformative for Baku`s political and economic development after the collapse of the Soviet Union.

The new deal, whose exact terms were not disclosed, remains profitable for its partners at current oil prices of $55 a barrel, BP Chief Executive Officer Bob Dudley said in an interview.

The fields produce 585,000 barrels per day, accounting for three quarters of the Azerbaijan`s oil output, but production is expected to rise as the partners could invest up to $40 billion in the next 32 years, according to a statement.

"There are still billions of barrels to recover and billions of dollars to invest" in the project, said Wood Mackenzie analyst Laura Bennie.

"Attention will now turn to a brand-new production platform (Azeri Central East), which will be commissioned in the 2020s," she said.

Azeri President Ilham Aliyev said the remaining oil reserves of the ACG oilfields stood at 500 million tonnes.

Stakes of other firms in the consortium have also been reduced. Chevron now has 9.57 percent, Inpex 9.31 percent, Statoil 7.27 percent, ExxonMobil 6.79 percent, TPAO 5.73 percent, Itochu 3.65 percent and ONGC Videsh 2.31 percent.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)

By continuing to use the site, you agree to the use of cookies. You can find out more by clicking this link

Close