October 31, 2017 / 8:47 AM / a year ago

Azerbaijan ratifies new oil deal with BP-led consortium

BAKU, Oct 31 (Reuters) - Azerbaijan’s parliament on Tuesday ratified a new oil field development contract between the Caucasus nation and a BP-led consortium.

BP and Azerbaijan agreed in September to extend to 2050 the contract to develop the country’s biggest oilfields, 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’s 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 percent from 11.65 percent, while BP’s stake declines to 30.37 percent from 35.8 percent. BP will remain the project operator.

Stakes of other firms in the BP-led consortium have also been reduced. Chevron now has 9.57 percent, Inpex 9.31 percent, Statoil 7.27 percent, ExxonMobil 6.79 percent, TPAO 5.73 percent, Itochu 3.65 percent and ONGC Videsh 2.31 percent.

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. (Reporting by Nailia Bagirova; Writing by Margarita Antidze; Editing by Dmitry Solovyov)

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