SOCAR's share in oil&gas projects to continue increasing: Deputy Speaker
Azerbaijan, Baku, June 26 /Trend, I.Khalilova /
In accordance with the law on the first supplement to the PSA on Azeri-Chiraq-Guneshli full field development, SOCAR affiliated company, with participates in the project, can purchase fully or partially their share and use efficiently on legal basis, Azerbaijani Deputy Parliamentary Speaker, Chairman of the parliamentary committee on natural resources, energy and ecology Valeh Alesgerov said.
Parliament adopted supplements to the ACG contract, providing conditions for SOCAR to purchase other companies' stake in this project.
"SOCAR's talks with several companies in this direction are on the stage of successful completion," Alesgerov said. "Following the enactment of the law, SOCAR's business partner's stake in ACG will increase from 10 percent to 11.6461 percent."
According to Alesgerov, the processes will continue in future under the ACG and other highly efficient projects, and its basis will be laid through adopting a law on the first supplement to the agreement.
SOCAR holds a 10 percent share in the ACG project.
According to the agreement, in the most risky period of the project - estimation of field reserves, ensuring initial oil production, creating relevant infrastructure, including export infrastructure, ensuring full field work in 1995-2004, SOCAR's 10-percent stake was financed at the expense of foreign consumers.
In this period operation expenses, which fall on SOCAR, made up $102.2 million and capital expenses $787.4 million.
"In this period SOCAR could not finance expenses through its own funds," Alesgerov said. "The company could not attract them from foreign banks or financial institutes. Over the subsequent period following the approval of field's reserves on international level, establishment of transport, extractive and export infrastructure to ensure efficient activity of the project, minimization of geological, trade and other risks, it was possible to finance SOCAR's participation share by increasing funds out of international financial institutes on acceptable terms. It occurred in 2005".
"Successful implementation of ACG project, financial state of SOCAR, and current and predicted economic, political and financial situation of the country enable us to increase SOCAR's stake," he added.
"If any company participating in the ACG desires to sell its stake fully or partially, SOCAR can participate in this deal with other companies on equal terms. It was necessary to create relevant legislative basis for this end, i.e. adopt a law on the first supplement to the agreement," Alesgerov said.
The amendments to the contract will allow SOCAR to acquire part of the Devon stake from British BP, as well as create conditions for the signing of a contract between SOCAR and BP. This project is very profitable and the company has approached this issue from the standpoint of commercial benefits.
Devon sold its 5.63 percent share in Azeri-Chirag-Guneshli in 2010 to its project partners - BP (3.29 percent), Chevron (0.99 percent), Inpex (0.96 percent) and Itocu (0.38 percent).
Currently the participation share of the operator BP in Azeri-Chirag-Guneshli is 37.43 percent, Chevron - 11.27 percent, Inpex - 10.96 percent, AzACG - 10 percent, Statoil - 8.56 percent, Exxon - 8 percent, TPAO - 6.75 percent, Itocu - 4.3 percent and Hess - 2.72 percent.
In 2010, Azeri-Chirag-Guneshli produced 40.6 million tons of oil compared to over 40.3 million tons in 2009. Production of oil from this block in 2010 averaged 823,100 barrels per day.