OVL buys Hess' stake in ACG oil fields in Azerbaijan for $1 bn
New Delhi: ONGC Videsh Ltd has bought US energy firm Hess Corp' stake in Azeri, Chirag and Guneshli (ACG) group of oil fields in Azerbaijan for USD 1 billion.
OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), has reached an agreement to buy 2.72 percent stake held by Hess in the largest oil field in the Azerbaijan sector of the Caspian basin as well as its 2.36 percent stake in an associated pipeline, the US firm said in a statement.
Hess said the deal was expected to close in the first quarter of 2013. It is subject to Indian and other regulatory approvals.
As part of the deal, the company will also buy Hess' 2.36 percent stake in BTC export pipeline.
The pipeline transports crude oil from Azeri capital city of Baku to the Mediterranean port of Ceyhan in Turkey via Georgia.
The field, which has total reserves of over 6.5 billion barrels, produced 16.8 million tonnes in first six months of 2012.
Rothschild advised ONGC Videsh on the sale.
UK's BP plc is the operator of the fields with 34.1 percent stake. Other partners include Chevron (10.2 percent), SOCAR (10 percent), INPEX (10 percent), Statoil (8.6 percent), ExxonMobil (8 percent), TPAO (6.8 percent), Devon (5.6 percent) and ITOCHU (3.9 percent).
The ACG field lies 120 km off the coast of Azerbaijan in 120 meters of water.
The ACG Production Sharing Agreement (PSA), signed in September 1994, covers the 30 year development of the Azeri-Chirag-Gunashli contract area.
From the start, the activity level in AIOC has been exceptionally high. The field has been developed in several phases: Chirag has been producing since 1997 as part of the Early Oil Project (EOP).
This was followed by Azeri Project Phase 1 - Central Azeri production in early 2005. Successive Phase 2 included West Azeri, which started production in January 2006, East Azeri started production in October 2006 and Phase 3 - Deepwater Gunashli started up in April 2008.
The next step of development of ACG is the Chirag Oil Project which is currently at the execute stage with first oil expected in 2013. Overall production from all phases is expected to be about 1 million barrels per day.
Potential ultimate recovery from the field is estimated at over 5.0 billion barrels of oil - a super-giant field on any global basis. To date about 1.4 billion barrels (about 188 million tonnes) of oil has been produced from the field.