In 1994, when BP and SOCAR signed a deal for the development of the Azeri, Chirag and Gunashli oil fields in the deepwaters of the Caspian Sea, it was dubbed the "Contract of the Century."
Now, the "Contract of the New Century" has been signed, extending the development of the BP-operated field out to 2049.
Some 3.2 billion bbl have already been produced following some US$33 billion investment in the fields, 120km east of Baku. A further $40 billion could be invested in the next 32 years, according to the partners in the new "amended and restated" deal, which covers the development of the Azeri, Chirag fields and the deepwater portion of the Gunashli field (ACG).
The deal has been signed between 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. It is subject to ratification by the Parliament (Milli Majlis) of the Republic of Azerbaijan.
As part of the new contract, the international co-venturers will pay a bonus of $3.6 billion to the State Oil Fund of the Republic of Azerbaijan, and SOCAR will increase its stake from 11.65% to 25%.
BP CEO Bob Dudley said: “Over the past 23 years the 'Contract of the Century' has truly transformed Azerbaijan. Today’s contract is perhaps an even more important milestone in the history of Azerbaijan... In light of that, I think it is fair to call this the Contract of the New Century.”
First oil was produced from the Chirag field on 7 November 1997. In 1H 2017, total production from ACG averaged 585,000 b/d.
ACG currently has eight offshore platforms – six production platforms and two process, gas compression, water injection and utilities platforms. The platforms export oil and gas to the Sangachal Terminalnear Baku.
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%.
Subsequent to this contract, SOCAR and its co-venturers have also agreed to progress engineering development work to evaluate an additional production platform in the ACG contract area.
Rovnag Abdullayev, SOCAR President, said: “Today is a significant day for Azerbaijan. It brings back the days, when we signed the ‘Contract of the Century’. Despite the challenging political and economic conditions of that time, thanks to the intense effort by our national leader Heydar Aliyev, the first ACG contract was signed, laying the foundation of the future economic development of Azerbaijan. Since the signing of the first PSA in 1994, ACG has benefited from $33 billion of investment, producing around 440 million tonne of oil, and delivering directly more than $125 billion of net profit to our country."