ExxonMobil and British Petroleum have been facing off over the terms of the renewal of the "contract of the century" in Azerbaijan, according to sources that spoke to Reuters.
BP currently operates the Azeri-Chigar-Guneshi fields in the middle of the Caspian Sea-a region that contributes a tenth of the firm's global output.
The British company has reportedly agreed with the Azeri government on the terms of a 30-year contract, but in an effort to expand its presence in the ACG region, Exxon has been pushing for a piece of the $100 billion pie.
Exxon currently procures one percent of its hydrocarbon production from the firm's stakes in the region.
The deadlock between the two companies has exacerbated tensions between Exxon CEO Rex Tillerson and BP CEO Bob Dudley, according to inside sources.
"There have been numerous attempts to find a breakthrough, with BP and Azerbaijan agreeing new terms but Exxon rejecting them time and time again," a Western source familiar with the negotiations commented. "It has been going on for almost two years, with Exxon insisting on better terms."
Sources contacted by Reuters did not disclose further details of the deal.
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The existing contract between BP and Azeri will remain in place for eight more years, but industry practice pushes leaders to firm up renewals years before contracts are set to expire.
The contract includes three-quarters of Azeri crude oil output, or about 0.7 percent of global production, and involves several firms that are part of the ACG consortium and the Azeri government.
The initial deal went into effect in 1994, three years after the Soviet Union collapsed, allowing the Azeri government to take advantage of its energy wealth for development projects.
Azerbaijan has become a regular provider of energy to Europe as it begins weaning off of Russian supplies after recent waves of geopolitical fallouts.
"Together with our co-venturers in Azerbaijan, we remain committed to building on this record of success and supporting the continued development of the local market," BP said.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on… More