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Baku. 22 September. REPORT.AZ/ Despite the decline in oil prices and investments across the world, it is remarkable to see continued international interest in Azerbaijan’s energy projects.
Report informs, independent think tank based in Washington, Caspian Policy Center (CPC) states in a special brief dedicated to a new contract on "Azeri-Chirag-Gunashli" (ACG) fields block.
The brief states that on September 14, 2017, Azerbaijan and its international partners signed amended and restated agreement on the joint development and production sharing for ACG fields block. The Center believes that the continued trust of the international oil majors in Azerbaijan is due to the reliability, credibility and commerciality of the previous and current projects. During the next 32 years, more than $40bn capital will be invested in the ACG oil field.
"Azerbaijan signed the first oil contract when it was just received its independence and despite all challenges of being a young state, it managed to prove itself as a reliable partner in delivering the responsibilities of the major international undertaking", the brief says.
CPC considers that Azerbaijan concluded a new contract on better terms than the previous contract. Thus, according to the Center's estimations, even at current oil prices of US$55 a barrel, the extracted oil reserves are expected to create a profit opportunity of US$180 bn, a 75% share of which will be apportioned to Azerbaijan, in accordance with the terms of the new agreement.
After ratification of the agreement by the Azerbaijani Parliament (Milli Majlis), State Oil Fund of the Republic of Azerbaijan (SOFAZ) will be paid a bonus of US$3.6 billion. Also, the State Oil Company of Azerbaijan Republic (SOCAR), which owned 11,65% share in the previous agreement, increased its share to 25%.
The brief specially stresses that countries like Norway, the United States, UK, Turkey, Japan and India, the international partners of Azerbaijan in ACG agreement, expressed strong political support to the agreement and noted strategic value of energy relations with Azerbaijan at a high level. The United States has actively supported the development of the oil and gas resources in Azerbaijan and elsewhere in the Caspian Basin since the early 1990’s, seeing their development and their secure delivery to European and other markets as key to boosting economic prosperity and global energy security.
Commenting on the new contract US Ambassador Robert Cekuta said that in terms of global energy security, the United States recognizes and appreciates the importance of Azerbaijan:“US is pleased to continue cooperation with Azerbaijan within the extension of agreement on ACG development. The US has actively supported a production of oil and gas resources in Azerbaijan and other places of the Caspian basin. The main goal is a delivery of oil and gas to Europe and other markets. And this contributed to economic development and global energy security. Azerbaijan’s importance is recognized by the US today. This reality was clearly reflected in the US president Donald Trump’s letter on Azerbaijan’s Independence Day on May 28, as well as the 24th Oil and Gas Exhibition and conference, US Secretary of State Rex Tillerson’s letters to the Southern Gas Corridor and its Advisory Council held in February. US-assisted Azerbaijan to transport its oil to world markets in the late 1990s provided political support to Baku-Tbilisi-Ceyhan (BTC), the US companies participated in here with their finances and technologies. The US has been and will be a long-term partner of Azerbaijan in oil and gas sector, non-oil sector and implementation of New Silk Road project”.
"The contract for the largest oil complex offshore Azerbaijan could lead to billions of dollars in investments and billions more in oil barrels. American oil companies have remained among the original participants in the AIOC consortium, and in the late 1990s, the United States provided strong political and financial support for the Baku-Tbilisi-Ceyhan (BTC) pipeline, which carries oil from ACG and other Caspian fields to world markets. American oilfield equipment and services companies also have played a key role in the implementation of these projects. After BTC, our cooperation led to the construction of the South Caucasus Pipeline. Now with the new contract US companies Chevron and ExxonMobil will acquire an overall 16.4% share in the renewed ACG contract. More recently, the United States has worked closely with Azerbaijan, Georgia, Turkey, and other countries in developing the Southern Gas Corridor, which will enhance European energy security still further by creating a new source and route for gas supply to European consumers. This pipeline now delivers Azerbaijani gas to Georgia and Turkey. Now with the new contract US companies Chevron and ExxonMobil will acquire an overall 16.4% share in the renewed ACG contract" the brief says.
Notably, relations between the US and the Caspian region, economic, political, energy and security issues of the region constitute the central research focus of the Center.
The Center's full report of the special brief on the new contract on ACG fields block in English is available at the following link:
