Azerbaijan government and co-venturers sign amended and restated Azeri-Chirag-Deepwater Gunashli PSA

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 signed the amended and restated agreement on the joint development and production sharing (PSA) for the Azeri, Chirag fields and the deepwater portion of the Gunashli Field (ACG) in the Azerbaijan sector of the Caspian Sea. The contract is now subject to ratification by the Parliament (Milli Majlis) of the Republic of Azerbaijan.

The contract was signed in Baku on September 14th by Rovnag Abdullayev, President of SOCAR, on behalf of the Azerbaijan government, and by the representatives of the co-venturer companies in the presence of Ilham Aliyev, President of the Republic of Azerbaijan, and a group of visiting senior government and state officials.

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, and SOCAR will increase its equity share in the ACG PSA from 11.65% to 25%. During the next 32 years, there is the potential for more than $40 billion of capital to be invested in the ACG oil field.

Following completion of the contract, the new ACG participating interests will be as follows: BP, 30.37%; AzACG (SOCAR), 25.00%; Chevron, 9.57%; INPEX, 9.31%; Statoil, 7.27%; ExxonMobil, 6.79%; TP, 5.73%; ITOCHU, 3.65%; and ONGC Videsh Limited (OVL), 2.31%.

Subsequent to this contract, SOCAR and its co-venturers have also agreed to progress engineering development work to evaluate an additional production platform in the ACG contract area.

Rovnag Abdullayev, SOCAR President, said: “Today is a significant day for Azerbaijan. It brings back the days, when we signed the Contract of the Century. 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.

“Finalising the negotiation process between SOCAR and the partner companies today, we have signed the new contract on the ACG project on agreed terms. The new contract is effective until the end of 2049. The terms of the new contract will take effect following their ratification by the Parliament (Milli Majlis) of the Republic of Azerbaijan, which will enable us to maximise the economic benefits for our country from ACG over the next 32 years. The terms of the new contract reflect the growing financial and technological potential of Azerbaijan and SOCAR. They also demonstrate the confidence of our foreign partners in the Azerbaijani economy, taking our effective partnership to a new level.”

Bob Dudley, Group Chief Executive of BP, said: “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. Today’s contract is perhaps an even more important milestone in the history of Azerbaijan as it ensures that over the next 32 years we will continue to work together to unlock the long-term development potential of ACG through new investments, new technologies and new joint efforts to maximise recovery. In light of that, I think it is fair to call this the Contract of the New Century.”

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