BP is set to continue running one of the world's largest oilfields after a letter of intent for the "contract of the century" was signed off by Azerbaijan's state oil firm Socar.
BP leads the Azerbaijan International Operating Co. (AIOC), which operated the Azeri-Chirag-Gunashli (ACG) development in the Caspian Sea.
The agreement will cover the development of the field until 2050 and will add significant resource development potential to the middle of the century. Today ACG, which has already produced more than 3 billion bo, produces about 620,000 boe/d.
ACG is a super-giant field about 100km east of Baku. Discovered in the early 1970s, when Azerbaijan was still part of the Soviet Union, it is the biggest producing oil field in the Caspian Sea and covers an area of more than 432sq km in 120m-170m water depth. The depth of the reservoir is 2000-3500m.
The existing ACG PSA was signed in September 1994 for 30 years. Oil production from the field started in November 1997. To date the field has produced more than 3 billion barrels of oil with around $33 billion of investment.
Bob Dudley, BP CEO, said: “This is an important day for Azerbaijan, SOCAR and the AIOC partnership. It opens up an exciting opportunity to the middle of the century for us to continue this extraordinary partnership. In 1994 we set out to develop ACG in the new phase of the country’s energy journey. BP is very proud to be a part of this long-term partnership and looks forward to continuing it for many decades to come.”
The LoI agrees the key commercial terms for the future development of the ACG field and enables the parties to conclude negotiations and finalize fully-termed agreements in the next few months.
Socar president Rovnag Abdullayev said negotiations with ACG’s foreign partners had been ongoing for some time and that this was the “contract of the century. It is very important to Azerbaijan - it is the symbol of our oil industry," he says. "It has opened up a whole new era for the country’s development."
There are six producing platforms on ACG, Chirag 1, Central Azeri, West Azeri, East Azeri, Deepwater Gunashli, West Chirag; and two process, gas compression, water injection and utilities (PCWU) platforms, equipped with latest technologies. They are linked with an onshore terminal in Sangachal near Baku. From the terminal ACG oil is exported to world markets primarily by the Baku-Tbilisi-Ceyhan oil export pipeline and the Western Route Export Pipeline to Supsa.
BP is the operator acting on behalf of AIOC and the Contractor Parties to the ACG Production Sharing Agreement. The shareholders in AIOC are BP, Chevron, INPEX, Statoil, ExxonMobil, TPAO, ITOCHU and ONGC Videsh.
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