Baku, September 20, AZERTAC

SOCAR (The State Oil Company of the Azerbaijan Republic) together with bp, MOL, INPEX, Equinor, ExxonMobil, TPAO, ITOCHU and ONGC Videsh, today announced the signing of an addendum to the existing production sharing agreement (PSA) for the Azeri and Chirag fields and the deep water portion of the Gunashli field (ACG) in the Azerbaijan sector of the Caspian Sea.

According to bp Azerbaijan, the addendum amends the ACG PSA enabling the parties to progress the exploration, appraisal, development of and production from the non-associated natural gas (NAG) reservoirs of the ACG field. The non-associated natural gas resources of ACG are believed to be significant, with up to 4 trillion cubic feet (tcf) in place.

The new gas deal was celebrated in Baku today during an event which marked Azerbaijan’s national Oil Workers’ Day and the 30th anniversary of the signing of the ACG PSA. In attendance were Rovshan Najaf, President of SOCAR, Gordon Birrell, bp’s executive vice president (EVP) of production and operations, Gary Jones, president of AIOC, and senior executives of the ACG co-venturer companies.

The addendum is effective until the end of the existing ACG PSA in 2049. During the next 25 years, and subject to exploration and appraisal of the NAG reservoirs, there is a potential for billions of dollars of capital to be invested in the development of NAG reservoirs of the ACG field.

The participating interests of the ACG co-venturers in the NAG project are the same as in the existing ACG PSA: bp (30.37%), SOCAR (25.0%), MOL (9.57%), INPEX (9.31%), Equinor (7.27%), ExxonMobil (6.79%), TPAO (5.73%), ITOCHU (3.65%), ONGC Videsh (2.31%).

bp remains the operator of the ACG PSA.

Rovshan Najaf, President of SOCAR, said: "Today is a remarkable day in Azerbaijan's energy journey. The signing of this gas agreement represents not just a commercial triumph, but also a strategic milestone in our efforts to further diversify our energy resources. On this significant anniversary of the “Contract of the Century,“ historical milestone signed under the leadership og our national leader Heydar Aliyev, we are once again proving that Azerbaijan is a reliable partner in global energy markets. This project will bolster Azerbaijan’s role as a key supplier of energy to Europe, contributing to the energy security of our partners."

Gordon Birrell, bp’s EVP of production and operations, said: “We are excited to embark on the NAG project as we see tremendous potential in unlocking ACG’s gas resources. It is a truly historic day for ACG. And it is remarkable that on its 30th anniversary ACG is setting off on a new journey – a natural gas journey – along with its exceptional oil accomplishments.”

“Over the past 30 years ACG has truly transformed Azerbaijan, making it a significant global energy supplier. Today’s deal is perhaps equally as important as the initial PSA as it will enable commercial gas exports from this great field for the first time in its history, maximising its economic value and supporting Azerbaijan’s plans for increasing energy supplies to Europe,” he added.

NAG reservoirs are multiple geological formations beneath and above the currently producing oil reservoirs, and which were not initially included in the existing ACG PSA. In 2022, ACG co-venturers and SOCAR agreed to drill a data well into the NAG reservoirs to collect gas pressure data. The data well was completed in 2023 and the interpretation of the acquired data confirmed the presence of significant natural gas resources – up to 4 tcf – within the expected pressure range.

In accordance with the addendum, SOCAR and ACG co-venturers are now planning the next steps for the development of NAG reservoirs. As part of this, an initial well is being drilled to produce gas from two priority reservoirs. The well is important as it will deliver appraisal through production which is expected to underpin future development plans. The well is drilled from the existing West Chirag platform with the first gas production expected in 2025. It has been agreed that SOCAR will be the buyer of all gas produced from the initial well.