Baku, Azerbaijan, Jan. 16
By Maksim Tsurkov – Trend:
Extension of the contract for development of the Azeri-Chirag-Gunashli (ACG) block of fields, aka ‘Contract of the Century’, will bring extra investment of $20 billion, a source in the Azerbaijani oil and gas market told Trend.
On Dec. 23, 2016, the Azerbaijani state oil company SOCAR and the BP-operated Azerbaijan International Operating Company extended the ‘Contract of the Century’ by 2050.
BP and SOCAR will in the coming months finalize the terms of the new Production Sharing Agreement (PSA), which must be ready for ratification in July, according to the source.
By extending the contract, the consortium intends to get additional 2.5 billion barrels of oil through the enhanced oil recovery (EOR) technique, said the source, adding the use of EOR will bring in additional investment of about $20 billion.
“This technique has already been successfully used by BP in the 1970s at the Prudhoe Bay field in Alaska.”
The terms of the new contract on distribution of the profit oil may differ from the previous ones, said the source, adding the issue will be addressed in details.
Currently, 80 percent of the total net profit goes to Azerbaijan, while the remaining 20 percent goes to investment companies, according to the terms of the ‘Contract of the Century’.
The source also said BP will reduce its participation in the consortium from the current 35.78 percent to about 30 percent, while SOCAR plans to increase its share from the current 11.65 percent to 20 percent.
BP Azerbaijan operates the development of the ACG block. The contract for development of the ACG block was signed in 1994 for a period of 30 years. The proven oil reserve of the block nears one billion tons.
More than 3 billion barrels of oil have been produced from the field to date.
Shareholders of the project are BP (35.78 percent), Chevron (11.27 percent), Inpex (10.96 percent), AzACG (11.65 percent), Statoil (8.55 percent), Exxon (8 percent), TPAO (6.75 percent), Itochu (4.3 percent) and ONGC (2.72 percent).
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