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Azerbaijan will sign in the coming days a new deal with BP to continue the development of the Azeri-Chirag-Gunashli (ACG) oil field in the Caspian Sea until 2050, extending the existing contract that is set to expire in 2024, Azeri media quoted President Ilham Aliyev as saying on Wednesday.
ACG was Azerbaijan’s first offshore oil Production Sharing Agreement (PSA) contract with Western majors. The country and a consortium of foreign oil companies signed back in 1994 a 30-year deal to develop the field. Foreign partners in the venture—alongside SOCAR’s 11.6 percent interest—include BP, Chevron, INPEX, Statoil, ExxonMobil, TPAO, ITOCHU, and ONGC, with BP acting as operator.
In December last year, BP, its co-venturers, and Azerbaijan signed a letter of intent (LoI) to cover the development of the field until 2050.
“The LoI agrees the key commercial terms for the future development of the ACG field and enables the parties to conclude negotiations and finalise fully-termed agreements in the next few months,” BP said back then.
Now, according to Azeri President Aliyev, the signing of the actual contract is expected shortly.
ACG is the biggest producing oil field in the Caspian Sea, and oil production there started in November 1997. Until the end of 2016, the field had produced more than 3 billion barrels of oil with around US$33 billion of investment, BP says. There are six producing platforms on ACG, linked with an onshore terminal in Sangachal near Baku. From that terminal, ACG’s oil is exported to world markets primarily by the Baku-Tbilisi-Ceyhan oil export pipeline, and the Western Route Export Pipeline to the Supsa terminal in western Georgia.
In the first half of 2017, the ACG field production averaged 585,000 bpd from the six platforms. BP and its partners spent more than US$230 million on operating expenditure and some US$601 million in capital expenditure on ACG activities between January and June this year, BP said last month.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.