Stake in Azeri-Chirag-Gunashli can be crucial to fulfilling growth ambitions: WoodMac

Oil&Gas Materials 4 June 2020 09:09 (UTC +04:00)

BAKU, Azerbaijan, June 4

By Leman Zeynalova – Trend:

A stake in the project for development of Azeri-Chirag-Gunashli (ACG) block of oil fields in the Azerbaijani sector of the Caspian Sea can be crucial to fulfilling growth ambitions, Ashley Sherman, Principal Research Analyst – Caspian & Europe at Wood Mackenzie told Trend.

He was commenting on the recent news about re-launch of sales of US Exxonmobil’s stake in ACG.

"These are tough times for merger and acquisition (M&A) activity and companies targeting asset sales because of the low oil price and unprecedented market uncertainty. There are not too many buyers at the moment, as the upstream sector focuses on preserving cash," said the analyst.

That said, an entry into ACG and BTC remains an attractive opportunity for those with funds – offering long-life and low-cost oil production under stable tax terms, Sherman explained.

Some sources said that China National Offshore Oil Corp (CNOOC), India’s ONGC and Indonesia’s Pertamina have shown interest in acquiring those assets.

"It is no surprise to see Asian national oil companies again publicly linked with a strategic move. As MOL’s deal with Chevron shows, a stake in ACG can be crucial to fulfilling volume and value growth ambitions. However, we would expect any interested buyer to evaluate a deal using conservative assumptions, even if prices rebound," he concluded.

ExxonMobil, for its part, told Trend that the company is testing market interest for its non-operated producing assets in Azerbaijan following interest expressed by third parties to acquire its assets.

"We continually review our assets for their contribution toward meeting the company’s operating needs and financial objectives. If other companies find more value in an asset, we will sell," said the company.

Recently, Hungarian MOL Group acquired US Chevron’s share in ACG.

ACG participating interests are: BP (30.37 percent), SOCAR (25 percent), MOL (replaced Chevron as of 16 April 2020 (9.57 percent), INPEX (9.31 percent), Equinor (7.27 percent), ExxonMobil (6.79 percent), TPAO (5.73 percent), ITOCHU (3.65 percent), ONGC Videsh Limited (OVL) (2.31 percent).

Total Azeri-Chirag-Gunashli (ACG) production for the first quarter of 2020 was on average about 524,000 barrels per day (b/d) (about 48 million barrels or more than 6.4 million tonnes in total).


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