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    Chevron to Quit Caspian Field

Summary

US major Chevron plans to leave a major Azeri project.

by: Dalga Khatinoglu, Ilham Shaban

Posted in:

Complimentary, Natural Gas & LNG News, Asia/Oceania, Europe, Corporate, Investments, Caspian Focus, Market News, Azerbaijan

Chevron to Quit Caspian Field

US major Chevron has told Azeri state-run Socar and PB, operator of the Azeri-Chirag-Guneshli block, that it plans to leave this project in order to focus on its other businesses, an Azerbaijan government source told NGW December 5.

Reuters cited industrial sources December 4, who said that both Chevron and Exxon Mobil are seeking to sell their stakes in ACG.

However, an Azeri government source told NGW that, at the moment only Chevron has decided to leave the project, by selling its 9.75% stake in ACG as well as its 8.9% share in the Baku-Tbilisi-Ceyhan oil pipeline.

Exxon Mobil holds 6.79% and 2.5% stakes in ACG and BTC respectively.

"According to the production sharing agreement, the US company should first offer its stake to Socar or BP. If they decline, then the stakes should be offered to other shareholders. If none of these buy, then Chevron is free to sell its stake to other companies; this process can last 6 to 12 months," the source said.

The BP-led ACG consortium signed a 25-yr extension contract in September 2017 to spend more $40bn on ACG by 2050, compared with the $43.5bn already spent since 1994, of which $35bn was capital expenditure.

Government officials said that, despite the extension contract only being signed in September 2017, it replaces the old agreement since January of that year: "In other words, all the terms of the new contract came into force since January 2017."

BP told NGW that during the period of January 2017 to September 2018, the consortium spent $823mn in operating expenditure (including $367mn in 9M 2018) plus a further $2bn in capital expenditure (including $825mn in 9M 2018). Last year ACG produced 588,000 b/d oil, and this remained unchanged in 2018. 

The government source said that Chevron is continuing to comply with the extension of the contract's investment plan; despite capital expenditure increasing significantly after 2H 2019.

The source also said that there are no concerns about the future. "Total and Statoil [now Equinor] left Azerbaijan’s other BP-led giant project Shah Deniz in 2013. Total sold stakes to Petronas, and Statoil sold to Socar and BP; Shah Deniz has not faced any challenges and will develop according to plan."

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