British oil major BP and its partners on Thursday signed a new contract for the joint development and production sharing (PSA) for the Azeri, Chirag fields and the Deep Water Portion of the Gunashli Field (ACG) in Azerbaijan’s Caspian Sea, Kallanish Energy reports.
Following negotiations between the Azeri government, its state-owned oil company SOCAR and the international oil companies (IOCs), an amended and restated contract was signed in Baku. The contract is now subject to ratification by the Parliament of Azerbaijan and will be effective until the end of 2049.
Under the new terms, BP will remain the operator of the ACG PSA with a 30.37% stake. SOCAR will increase its equity stake from 11.65% to 25%. The remaining shareholder structure includes: Chevron, 9.57%; INPEX, 9.31%; Statoil, 7.27%; ExxonMobil, 6.79%; TP, 5.73%; ITOCHU, 3.65%; and ONGC Videsh Ltd. (OVL), 2.31%.
The deal, named the “Contract of the New Century” by BP CEO Bob Dudley, also includes the payment of a $3.6 billion bonus to Azerbaijan’s State Oil Fund. During the next 32 years, there’s the potential for more than $40 billion in capital to be invested in the ACG oilfield.
“Today is a significant day for Azerbaijan,” said Rovnag Abdullayev, SOCAR president, noting “since the signing of the first PSA in 1994, ACG has benefited from $33 billion of investment, producing around 440 million tonnes of oil, and delivering directly more than $125 billion of net profit to our country.”
“Over the past 23 years, the Contract of the Century has truly transformed Azerbaijan, energy supplies to Europe and all of us who have worked so hard to make it a success,” said Dudley. “I think it is fair to call this the Contract of the New Century.”
ACG’s total production averaged 585,000 barrels per day (BPD) in the first half of 2017. The development has six production platforms and two process, gas compression and utilities platforms, which export the hydrocarbons to the Sangachal Terminal, onshore near Baku.