Azerbaijan’s parliament on Oct. 31 ratified a new oil field development contract between the country and a BP-led consortium.
BP and Azerbaijan agreed in September to extend to 2050 the contract to develop the country’s biggest oil fields, Azeri-Chirag-Guneshli (ACG), a deal dubbed “the contract of the century” when first signed in 1994 until 2024.
The new contract secures large investment in Azerbaijan’ oil sector over decades and a one-off bonus of $3.6 billion for the government, a welcome boost for a country that has struggled with a sharp drop in oil prices in the past three years.
Under the new production-sharing agreement, Azeri state energy company SOCAR will increase its share to 25% from 11.65%, while BP’s stake declines to 30.37% from 35.8%. BP will remain the project operator.
Stakes of other firms in the BP-led consortium have also been reduced. Chevron now has 9.57%, Inpex 9.31%, Statoil 7.27%, ExxonMobil 6.79%, TPAO 5.73%, Itochu 3.65% and ONGC Videsh 2.31%.
The ACG fields produce 585,000 barrels per day, accounting for three quarters of Azerbaijan’s oil output, but production is expected to rise as the partners could invest up to $40 billion in the next 32 years.