Baku, Azerbaijan, Sept.15
By Leman Zeynalova – Trend:
The extension of the contract on Azerbaijan’s Azeri-Chirag-Gunashli (ACG) oil fields is a trend-setter for other mega-projects in the Caspian region, Edward Chow, a senior fellow in the Energy and National Security Program at the Center for Strategic and International Studies (CSIS) told Trend Sept.15.
“This is a most important development. Early extension of the original contract and the length of this extension allow significant investments to be made to maintain production and prolong the productive lives of these giant fields,” he added.
Charles Ellinas, CEO of Cyprus-based energy consultancy e-CNHC told Trend that it is very important to Azerbaijan and its economy, but also to the shareholder oil companies.
“This will be especially so, as the assurance given by a long term renewal, to 2050, now encourages the shareholders to commit new investment in expanding the production facilities. It will allow the field to continue generating value for a long time to come,” he added.
Moreover, Japan’s INPEX company, which is one of the shareholders of the project said in a message on its website that the agreement is expected to contribute not only to the stable and long-term energy supply of Japan but also to the realization of INPEX’s pursuit of the continuous enhancement of E&P activities, which is positioned as one of three growth targets outlined in the company’s “Medium- to Long-Term Vision.”
“Going forward, INPEX will continue to enhance project value including maintaining and increasing its production and reserves at the ACG oil fields,” said the message.
Another shareholder of the project, Japan’s ITOCHU said that through this transaction, the company aims to strengthen its long-term upstream energy portfolio.
The signing ceremony of a new contract on development of the Azeri-Chirag-Gunashli (ACG) block of oil and gas fields was held in Baku Sept. 14.
The Azerbaijan government and the State Oil Company of the Republic of Azerbaijan (SOCAR), together with BP, Chevron, INPEX, Statoil, ExxonMobil, TP, ITOCHU and ONGC Videsh have today signed the amended and restated agreement on the joint development and production sharing (PSA) for the Azeri, Chirag fields and the Deep Water Portion of the Gunashli Field (ACG) in the Azerbaijani sector of the Caspian Sea until 2050.
The contract is now subject to ratification by the Azerbaijani parliament.
BP will remain the operator in accordance with the amended and restated ACG PSA.
As part of the contract, the international co-venturers will pay a bonus of $3.6 billion to the State Oil Fund of the Republic of Azerbaijan (SOFAZ) and SOCAR will increase its equity share in the ACG PSA from 11.65 percent to 25 percent. During the next 32 years, there is the potential for more than $40 billion to be invested in the ACG oil field.
Following the completion of the contract, the new ACG participating interests will be as follows: BP - 30.37 percent; AzACG (SOCAR) - 25.00 percent; Chevron - 9.57 percent; INPEX - 9.31 percent; Statoil - 7.27 percent; ExxonMobil - 6.79 percent; TP - 5.73 percent; ITOCHU - 3.65 percent; and ONGC Videsh Limited (OVL) - 2.31 percent.
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