The extension of the contract on development of Azeri-Chirag-Gunashli block of oil fields in the Azerbaijani sector of the Caspian Sea will further solidify and enhance Azerbaijan’s role as an energy corridor to global energy markets, Rob Sobhani, director general of the Caspian Group Holdings, told Trend on September 15.
“I was witness to the signing of the first Contract of the Century and the event was very emotional because it solidified the role of Azerbaijan in global energy markets. The Contract of the Century not only protected the commercial interests of Azerbaijan, it laid the foundation of sustained economic growth for Azerbaijan. In addition, it allowed Azerbaijan to successfully tackle the problem of poverty which today is almost non-existent in the country,” he said.
Sobhani noted that increased share of Azerbaijan’s state oil company SOCAR in the project will allow for more economic growth in Azerbaijan due to higher profit sharing.
“In addition, higher economic growth will allow Azerbaijan to project its soft power to the world. By soft power I mean the importance of Azerbaijan’s heritage, culture and literature,” he said.
Equally important, the extension of the ACG contract is a signal to global investors that under the leadership of President Ilham Aliyev, Azerbaijan remains a reliable and safe country to invest in, said Sobhani.
He pointed out that the stability of Azerbaijan is a main reason why investors feel comfortable with placing their assets in Azerbaijan.
“The benefits to Azerbaijan’s people are job creation, expansion of the middle class and confidence that their country is open and ready for global investors. The other benefit the extension of the ACG PSA will bring to Azerbaijan is tourism: as European and American energy companies continue to invest in Azerbaijan’s oil and gas sector more people will know about this beautiful country and its kind people,” added Sobhani.
For the ACG partners, Azerbaijan represents a safe investment environment and they benefit by making a fair return on their capital investment, he said, adding that it may also impact their stock prices especially for a company like BP that is the operator of ACG.
Sobhani believes that Azerbaijan, Europe and the US will become even more wedded to one another as a result of the extension of the ACG PSA.
“The pipeline that will deliver the oil to Europe and beyond further ties Azerbaijan to consumers in countries like Turkey, Italy and the US,” he said.
More broadly, and from the perspective of geopolitics, Azerbaijan’s role on the world stage is enhanced as a result of this extension, said Sobhani, adding that Azerbaijan is now the undisputed champion of energy exports from the Caspian to European markets.
The signing ceremony of a new contract on development of the Azeri-Chirag-Gunashli (ACG) block of oil and gas fields was held in Baku Sept. 14.
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 have today 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 Azerbaijani sector of the Caspian Sea until 2050.
The contract is now subject to ratification by the Azerbaijani parliament.
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 $3.6 billion to the State Oil Fund of the Republic of Azerbaijan (SOFAZ) and SOCAR will increase its equity share in the ACG PSA from 11.65 percent to 25 percent. During the next 32 years, there is the potential for more than $40 billion to be invested in the ACG oil field.
Following the completion of the contract, the new ACG participating interests will be as follows: BP – 30.37 percent; AzACG (SOCAR) – 25.00 percent; Chevron – 9.57 percent; INPEX – 9.31 percent; Statoil – 7.27 percent; ExxonMobil – 6.79 percent; TP – 5.73 percent; ITOCHU – 3.65 percent; and ONGC Videsh Limited (OVL) – 2.31 percent.
© Content from this site must be hyperlinked when used