Azerbaijan's increased share in ACG to positively affect SOFAZ's investment portfolio
Azerbaijan, Baku, Aug.7 / Trend, E.Ismayilov /
Azerbaijan paid $485 million to purchase an additional 1.6461 percent share in a major oil project - development of the Azeri-Chirag-Guneshli offshore fields' block, State Oil Fund of Azerbaijan (SOFAZ) said on Saturday.
As the Fund said, part of BP's shares was purchased at the expense of stock redemption by SOFAZ, which was issued by AzACG, owner of 11.6 percent of the project share.
Prior to purchasing stock, AzACG's project share hit 10 percent.
As BP said, shares at 1.6461 percent, previously purchased by Devon and resold by AzACG, Ltd., were estimated at $585 million.
BP accounted for the $100 million difference in the cost of shares, saying that it is a result of the British company covering these funds at the expense of profits from oil sales. The oil-sale profits are from the Devon stock, purchased before being sold to Azerbaijan.
In this regard, it cost AzACG, Ltd. $485 million to purchase a portion of shares in the project.
"Purchase of stock by SOFAZ, which was issued by AzACG Ltd. worth $485 million, was carried out in accordance with the fund's investment strategy", SOFAZ said.
Given that the stock will yield the same level as similar securities in world markets, these investments are seen to benefit SOFAZ's investment portfolio.
"Given that the funds paid for the stock have been spent on implementing the strategic project, which is of great importance for the country, this investment can be considered successful for SOFAZ in general", the Fund said.
The contract to develop the Azeri-Chirag-Guneshli fields was signed in 1994. 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 35.83 percent, Chevron - 11.27 percent, Inpex - 10.96 percent, AzACG - 11.16 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.