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A Middle East Financial Crisis Is In The Making

A Middle East Financial Crisis Is In The Making

A Dubai-based operator of ports…

BP Extends Monumental Azeri Oil Field Contract Until 2050

BP

A BP-led consortium today inked an extension to its production sharing agreement with the Azeri government for the development of the Azeri-Chirag-Gunashli oil field group until 2050, BP said in a press release.

The contract was Azerbaijan’s first offshore oil production sharing agreement with Western majors, and was originally due to expire in 2024. It was signed 23 years ago, and since then the consortium has invested US$33 billion in the fields’ development and has extracted 440 million tons of crude oil, or 3.2 billion barrels. In the next 32 years, investments could reach US$40 billion, BP said.

First oil from the ACG blocks flowed in 1997. In the first half if 2017, the average daily output from the field stood at 585,000 barrels. There are six production platforms in the ACG block at the moment, and two processing ones. The consortium is considering the addition of one more production platform as well, BP said in the press release.

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.  

Related: Is Russia Pushing Saudi Arabia Out Of Asia?

The Azeri-Chirag-Gunashli block is the biggest oil formation in Azerbaijan. Since the signing of the initial contract, state revenues from its development have reached $125 billion, the president of the state oil company, SOCAR, said. Now, as part of the extension deal, Baku will also receive a one-off bonus payment of US$3.6 billion.

The consortium that develops the field includes, besides BP as operator, also SOCAR, Japanese Inpex and Itochu, Turkish Petroleum, Statoil, Exxon, Chevron, and Indian ONGC Videsh. The extension involved a reshuffle in the stakeholding, with SOCAR increasing its share in the consortium to 25 percent from 11.65 percent and BP cutting its own from 35.8 percent to 30.37 percent.

By Irina Slav for Oilprice.com

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