The Azerbaijan Government and the State Oil Company of the Republic of Azerbaijan (SOCAR), together with BP, Chevron, INPEX, Statoil, ExxonMobil, TP, ITOCHU and ONGC Videsh signed the amended and restated agreement on the joint development and production sharing (PSA) for the Azeri, Chirag fields and the Deep Water Portion of the Gunashli Field (ACG) in the Azerbaijan Sector of the Caspian Sea. The contract is now subject to ratification by the Parliament (Milli Majlis) of the Republic of Azerbaijan.

The contract was signed in Baku today in the presence of H.E. President Ilham Aliyev of the Republic of Azerbaijan and a group of visiting senior government and state officials, by Rovnag Abdullayev, President of SOCAR, on behalf of the Azerbaijan Government, and by the representatives of the co-venturer companies.

BP will remain the operator in accordance with the amended and restated ACG PSA.

As part of the contract, the international co-venturers will pay a bonus of $3.6bn to the State Oil Fund of the Republic of Azerbaijan, and SOCAR will increase its equity share in the ACG PSA from 11.65 per cent to 25 per cent. During the next 32 years, there is the potential for more than $40bn capital to be invested in the ACG oil field.

Following completion of the contract, the new ACG participating interests will be as follows: BP, 30.37 per cent; AzACG (SOCAR), 25.00 per cent; Chevron, 9.57 per cent; INPEX, 9.31 per cent; Statoil, 7.27 per cent; ExxonMobil, 6.79 per cent; TP, 5.73 per cent; ITOCHU, 3.65 per cent; and ONGC Videsh Limited (OVL), 2.31 per cent.

Subsequent to this contract, SOCAR and its co-venturers have also agreed to progress engineering development work to evaluate an additional production platform in the ACG contract area.

Rovnag Abdullayev, SOCAR President, said: “Today is a significant day for Azerbaijan. It brings back the days, when we signed “The Contract of the Century”. Despite the challenging political and economic conditions of that time, thanks to the intense effort by our national leader Heydar Aliyev the first ACG contract was signed, laying the foundation of the future economic development of Azerbaijan. Since the signing of the first PSA in 1994, ACG has benefited from $33bn of investment, producing around 440 million tonnes of oil, and delivering directly more than $125bn of net profit to our country.

“Finalizing the negotiation process between SOCAR and the partner companies today, we have signed the new contract on the ACG project on agreed terms. The new contract is effective until the end of 2049. The terms of the new contract will take effect following their ratification by the Parliament (Milli Majlis) of the Republic of Azerbaijan, which will enable us to maximize the economic benefits for our country from ACG over the next 32 years. The terms of the new contract reflect the growing financial and technological potential of Azerbaijan and SOCAR. They also demonstrate the confidence of our foreign partners in the Azerbaijani economy, taking our effective partnership to a new level.”

Bob Dudley, Group Chief Executive of BP, said: “Over the past 23 years the Contract of the Century has truly transformed Azerbaijan, energy supplies to Europe and all of us who have worked so hard to make it a success. Today’s contract is perhaps an even more important milestone in the history of Azerbaijan as it ensures that over the next 32 years we will continue to work together to unlock the long-term development potential of ACG through new investments, new technologies and new joint efforts to maximise recovery. In light of that, I think it is fair to call this the Contract of the New Century.”

Notes:

- The existing ACG PSA was signed on 20 September 1994. Since that time around $33bn of investment has been made into the development of the ACG field.

- First oil was produced from the Chirag field on 7 November 1997. To date, the field has delivered around 3.2 billion barrels (around 440 million tonnes) of oil production, which has been exported to world markets, primarily via the Baku-Tbilisi-Ceyhan and Western Route Export pipelines.

- ACG has also delivered over 30 billion cubic metres of associated gas in total to the Government of Azerbaijan.

- In the first half of 2017, total production from ACG averaged 585,000 barrels per day.

- ACG currently has eight offshore platforms - six production platforms and two process, gas compression, water injection and utilities platforms. The platforms export oil and gas to the Sangachal Terminal, one of the world’s largest oil and gas terminals, onshore near Baku.

About Socar

SOCAR is an integrated state oil & gas company of Republic of Azerbaijan and is involved in upstream, midstream and downstream operations encompassing exploration of oil and gas fields, production, processing and transporting oil, gas and condensate, marketing of petroleum and petrochemical products in domestic and international markets and supplying natural gas to domestic and industrial customers in Azerbaijan. SOCAR has its trading companies in Switzerland, Singapore and UAE and representative offices in a number of other countries.