Reuters: Hungary's MOL in talks for Chevron's stake in giant Azeri oilfield

Hungarian energy firm MOL (MOLB.BU) is in talks to acquire Chevron’s (CVX.N) stake in a giant oilfield in Azerbaijan for more than $2 billion, according to three banking and industry sources involved in the process, Report informs citing Reuters.

MOL was initially interested in both oil companies’ stakes in the field but decided to bid only for Chevron’s 9.57% holding, the sources told Reuters.

Chevron and MOL both declined to comment.

It is noted that the discussions come as the Hungarian government of Prime Minister Viktor Orban is seeking to develop closer relations with central Asian countries.

Exxon continues to seek a buyer for its 6.8% stake in the field. The sale process is being run by Bank of America Merrill Lynch (BAML), according to the banking sources.

BAML declined to comment.

On September 20, 1994, the PSA was signed between the State Oil Company of Azerbaijan Republic (SOCAR) and a consortium of 11 foreign oil companies from six nations for the development of an area that covered three major oil fields in the Azerbaijan sector of the Caspian Sea – Azeri, Chirag and Deepwater portion of the Gunashli field (ACG). In September 2017 the agreement was extended until mid-century.

The potential of investment in ACG will exceed $40 bn in the next 30 years.

Currently the block of fields produce nearly 550,000 barrels of oil daily. Since the start of production and until the end of the second quarter of 2019 the fields produced about 488 mln tons (over 3.6 bn barrels) of oil. Oil is exported to the world markets mainly by Baku-Tbilisi-Ceyhan (BTC) and Western export pipeline (Baku-Supsa).

The oilfield is located in the Azerbaijani sector of the Caspian Sea, nearly 100 km east of Baku. The depth of the productive layer is 2000-3500 meters.

The current participating interests of ACG are as follows: BP (30.37 percent), SOCAR (25.0 percent), Chevron (9.57 percent), INPEX (9.31 percent), Equinor (7.27 percent), ExxonMobil (6.79 percent), TPAO (5.73 percent), ITOCHU (3.65 percent), ONGC Videsh Limited (OVL) (2.31 percent).