BP-led group may increase investments in Azerbaijan’s oilfield
The BP Plc-led group developing Azerbaijan's biggest oilfield will probably have to increase investments to stem an output decline even without winning a license extension, Bloomberg reported with the reference to Azerbaijani state oil company SOCAR deputy vice-president Vitaliy Baylarbayov.
"Whether the field will require additional investments or not, the probable answer is yes, it will," Baylarbayov said.
Harsh mistakes of the bp-operated international consortium [the Azerbaijan International Operating Company] have led to a sharp decline in oil production on the Azeri and Chirag fields, Azerbaijani President Ilham Aliyev said earlier at a meeting of the Cabinet of Ministers on the results of the country's economic development in the first nine months of 2012. As a result, Azerbaijan received over $8 billion less in direct revenue.
In response to the criticism, BP Azerbaijan said that the company is fully committed to Azerbaijan and working with SOCAR to address the ACG production issues as quickly as possible.
A landmark agreement on developing the ACG fields was signed with 13 energy majors from eight countries in Baku in 1994. ACG participating interests are: BP (35.83%), SOCAR (11.65%), Chevron (11.27%), Inpex (10.96%), Statoil (8.56%), ExxonMobil (8%), TPAO (6.75%), Itochu (4.3%), and Hess (2.72%). Hess has sold its share in the project to India's ONGC, and the transaction will be completed in the first quarter of 2013.
Bloomberg mentioned that BP and its partners have sought an extension to their production-sharing agreement beyond 2024 to allow them to recoup investments.
According to Baylarbayov, there is no conversation about extending the PSA.
'The remaining period is long enough to realize any kind of program agreed upon by the sides. SOCAR has the capacity to develop ACG after 2024 and produce "whatever remains recoverable," Baylarbayov said.