ONGC Videsh Ltd will buy US energy firm Hess' stake in Azerbaijan's giant Azeri-Chirag-Gunashli (ACG) oil field for an undisclosed amount.
OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), 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, sources privy to the development said.
As part of the deal, the company will also buy Hess' 2.36 per cent stake in BTC export pipeline.
The deal may be announced shortly, the sources said.
UK's 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 and contains 5.4 billion barrels of recoverable oil. The overall investment in the fields has reached $20 billion, which includes the amount spent on the BTC export pipeline. .
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 AIOC 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).
This was followed by Azeri Project Phase 1 - Central Azeri production in early 2005. Successive Phase 2 included West Azeri, which started production in January 2006, East Azeri started production in October 2006 and Phase 3 - Deepwater Gunashli started up in April 2008.
The next step of development of ACG is the Chirag Oil Project which is currently at the execute stage with first oil expected in 2013. 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.