Total will exit the Shah Deniz field, following an agreement the French explorer reached with Turkish state-owned oil company TPAO. Total will sell its 10% interest in Azerbaijan field and associated South Caucasus pipeline for US$1.5 billion, the company announced on 30 May 2014.
The additional 10% stake increases TPAO's hold to 19%, making it the second largest shareholder in the field next to operator BP, which holds 28.83% interest. The agreement was signed in Istanbul and witnessed by Turkish Prime Minister Recep Tayyip Erdogan and Turkish Energy and Natural Resources Minister Taner Yildiz.
The Shah Deniz field, covering 860sq km, is located 100km southeast of Baku in the Caspian Sea in water depths ranging from 50-550m. The field began producing in 2006, with its current output at 200,000 boe/d. In 2013, the Shah Deniz consortium approved a US$28 billion phase 2 development at the field that will see 16 billion cu. m/yr of gas moved 3500km from the field to consumers in Georgia, Turkey, Greece, Bulgaria and Italy. First production from phase 2 is expected by 2018.
BP's other partners in Shah Deniz include the State Oil Company of Azerbaijan Republic (SOCAR) (16.67%), Statoil (15.5%), Lukoil (10%), Nico (10%)
Of the sale, Total said it was in line with the company's active portfolio management, which has the company concentrating on more strategic asssets.
“This sale is another step forward in achieving our asset sale program," said Michael Borrell, Senior Vice President Continental Europe and Central Asia at Total’s Exploration and Production. "Following this operation, the group will have sold nearly $16 billion worth of asset since 2012, in line with its $15-20 billion asset sale target.”
In February, Total announced it was exiting offshore Angola block 15/06, opting to sell its 15% non-operating interest to Sonangol for $750 million. Total Chairman and CEO Christophe de Margerie told a CERAWeek 2014 press conference that the sale was a way to “rejuvenate” its assets by selling those that are too small, thereby helping the company to invest in other areas.
“We have to manage assets in more active way,” De Margerie said. “For those (assets) with little interest, we get rid of them and sell at best price.”
In Azerbaijan, Total remains operator (40%) of the offshore Absheron field. In 2011, Total announced it had discovered 500ft of cumulated net gas pays within high quality sands on the northern flank of a 270sq km structure. Absheron is located in 500m of water, 100km southeast of Baku, approximately 25km northeast of Shah Deniz. Total said it is currently conducting studies to prepare the field development plan.
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