ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corporation (ONGC), has bought 2.72 per cent stake held by US energy firm Hess Corporation in Azeri Chirag and Guneshli AGC group of oil fields in Azerbaijan for $1 billion.
“OVL has reached an agreement to buy 2.72 per cent stake held by Hess in the largest oil field in the Azerbaijan sector of the Caspian Basin as well as its 2.36 per cent 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 per cent 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. UKs BP Plc is the operator of the fields with 34.1 per cent stake.
Other partners include Chevron 10.2 per cent, Socar 10 per cent, Inpex 10 per cent, Statoil 8.6 per cent, Exxonmobil 8 per cent, Tpao 6.8 per cent, Devon 5.6 per cent and Itochu 3.9 per cent. 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 AICO 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).
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.