On September 14, 2017, Azerbaijan and its international partners signed a new deal to extend ACG until 2050. As part of the contract, US companies Chevron and Exxon get over 16 percent share in total (9,57 and 6,79 respectively). The original PSA, which was signed in 1994, was called the “Contract of the Century,” and this time the country signed a landmark agreement with BP and its partners in the Azeri, Chirag fields and the Deep Water Portion of the Gunashli Field (ACG), embodying celebration of a “Contract of the 21st Century”.
The contract was signed in Baku in the presence of President Ilham Aliyev and a group of visiting senior government and state officials. Following completion of the contract, the new ACG participating interests will be as follows: BP, 30.37%; AzACG (SOCAR), 25.00%; Chevron, 9.57%; INPEX, 9.31%; Statoil, 7.27%; ExxonMobil, 6.79%; TP, 5.73%; ITOCHU, 3.65%; and ONGC Videsh Limited (OVL), 2.31%. The consortium’s decision to extend its ACG PSA at this stage, 7 years prior to the planned 2024 expiration date, and despite plunging oil prices, reflects the consortium’s belief that there are still significant amounts of oil to be extracted and further capital investments to be unlocked. Even at current oil prices of US$55 a barrel, the extracted oil reserves are expected to create a profit opportunity of US$180 bn, a 75% share of which will be apportioned to Azerbaijan, in accordance with the terms of the new agreement.
The biggest shareholder in the contract is BP, which has over 30% share in the new contract. CEO of BP Bob Dudley, 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.”
Chevron also welcomes reaching an agreement on the ACG PSA extension between the Government of Azerbaijan and AIOC partners, subject to ratification by the Azerbaijan Parliament. "ACG is a world class asset, and this extension gives Chevron an opportunity to further strengthen the company's presence in Azerbaijan. The PSA extension will bring new financial benefits to the government and people of Azerbaijan and further develop the potential of ACG through new investments, new technologies and joint efforts to maximize recovery," the company said.
Another company that has almost a quarter-century presence in Azerbaijan is Statoil and it decided to continue to be part of the new contract. Al Cook, Statoil's Senior Vice President, said: "The new contract represents an important milestone for Statoil, our partners and Azerbaijan. We can now plan confidently for new investments, underpinning the value of this great field for the future. We are grateful to SOCAR, and to all those whose cooperation and trust led to this landmark agreement.”
The contract for the largest oil complex offshore Azerbaijan could lead to billions of dollars in investments and billions more in oil barrels. American oil companies have remained among the original participants in the AIOC consortium. USACC congratulates its founding members on this important milestone and wishes continued success over the next quarter-century.
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