BAKU, Azerbaijan, Nov.12
By Leman Zeynalova - Trend:
A stake in the project for development of Azerbaijani Azeri-Chirag-Gunashli (ACG) block of oil and gas fields will push Hungarian MOL Group’s average upstream operating costs below their current level of $6 per barrel of oil equivalent, said the company’s upstream executive vice president Berislav Gaso, Trend reports.
Speaking after MOL announced this month it was buying Chevron's 9.57 percent stake in Azerbaijan's Azeri-Chirag-Deepwater Gunashli complex in the Caspian Sea, Berislav Gaso told S & P Global Platts that the deal reflected a preference for low-cost assets, and should push MOL's average upstream operating costs below their current level of $6/b of oil equivalent.
Although ACG produced 584,000 b/d of crude last year, Gaso said he expected MOL's share of ACG production to be around 20,000 boe/d given the production sharing agreement gives the state 75 percent of 'profit oil'.
MOL's overall oil and gas output would rise to 120,000-130,000 boe/d, from 108,000 boe/d in the third quarter, he said.
With recoverable reserves of around 3 billion barrels, the ACG stake was a "building block" in MOL's effort to diversify away from Croatia and Hungary, Gaso said, and should lift the share of production it derives from outside those two countries to nearly 50 percent.
"Azerbaijan ticks all of the right boxes," he said. "If you think about longevity of the production profile and the reserves, the license has just been extended for another 30 years until 2049."
"It is a very long, stable plateau that is ahead of us. We see even upsides beyond the 2049 horizon. It is a very low-cost asset," Gaso said, noting MOL will be the third-largest partner after BP and state-owned SOCAR.
MOL Group has signed an agreement with Chevron Global Ventures Ltd and Chevron BTC Pipeline, Ltd to acquire their non-operated E&P and mid-stream interests in Azerbaijan, including a 9.57 percent stake in the Azeri-Chirag-Gunashli (ACG) oil field, and an effective 8.9 percent stake in the Baku-Tbilisi-Ceyhan (BTC) pipeline that transports the crude to the Mediterranean port of Ceyhan, for total consideration of USD 1.57 billion (subject to adjustments at closing).
The transaction remains subject to government and regulatory approvals and is expected to close by Q2, 2020.
The BTC Co. shareholders are: BP (30.1 percent); AzBTC (25.00 percent); Chevron (8.90 percent); Equinor (8.71 percent); TPAO (6.53 per cent); Eni (5.00 percent); Total (5.00 percent), ITOCHU (3.40 percent); INPEX (2.50 percent), ExxonMobil (2.50 percent) and ONGC (BTC) Limited (2.36 percent).
The contract for developing the ACG field was signed in 1994. A ceremony to sign a new contract on development of the ACG block of oil and gas fields was held in Baku Sept. 14, 2017.
The ACG participating interests are as follows: BP - 30.37 percent; AzACG (SOCAR) - 25 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; ONGC Videsh Limited (OVL) - 2.31 percent.
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