Videsh (OVL) and its partners have received an extension till December 2049 for the production sharing contract for the ACG fields in Azerbaijan.
The international co-venturers are set to pay a bonus of $3.6 billion, of which OVL's share will be to the tune of $111 million, to the State Oil Fund of Azerbaijan
in return for the extension.
OVL is the overseas arm of state-run Oil and Natural Gas Corporation (ONGC). OVL's partners in the block include State Oil Company of the Azerbaijan Republic (SOCAR), BP, Chevron, INPEX, Statoil, ExxonMobil, TPAO, and ITOCHU.
The agreement is subject to ratification by the Parliament (Milli Majlis) of the Republic of Azerbaijan.
The Azeri-Chirag-Deep water portion of the Gunashli (ACG) oil fields was initially signed in September 1994 for thirty years. "There is substantial amount of remaining oil and gas in the field and the PSA extension will benefit Azerbaijan and partners through sustained long-term production," OVL said in a statement on Monday.
As part of the new agreement, SOCAR
will increase its equity share in the ACG PSA from 11.65 per cent to 25 per cent. Following the completion of the agreement, the new ACG participating interests will be: 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; TPAO, 5.73 per cent; ITOCHU, 3.65 per cent; and ONGC
Videsh Limited, 2.31 per cent.
The ACG oil fields
are located in the Caspian Sea, approximately 100 km east of Baku, the capital of the Republic of Azerbaijan. The ACG oil fields
currently produce crude oil at a rate of approximately 585,000 barrels per day (average rate for first half of 2017) from three oil fields (Azeri Oil Field, Chirag Oil Field, and Deep water portion of Gunashli Oil Field). Crude oil produced at the ACG oil fields
is transported through the Baku-Tbilisi-Ceyhan pipeline (BTC pipeline) to Ceyhan on the Mediterranean coast of the Republic of Turkey, from where it is shipped to customers.
Videsh had acquired 2.7 per cent participating interest in the ACG PSA and 2.36 per cent in the BTC Pipeline from the Hess Corporation on March 28, 2013.