Azerbaijani parliament ratifies New Contract of the Century
The draft law on adoption and approval of the agreement on the joint development and production sharing (PSA) for the Azeri, Chirag fields and the Deep Water Portion of the Gunashli Field (ACG) in the Azerbaijan Sector of the Caspian Sea signed between SOCAR and Azerbaijan (ACG) Limited, BP, Chevron, INPEX, Statoil, ExxonMobil, TP, ITOCHU, ONGC Videsh and Turkiye Petrolleri A.O. and permission for its operation has today been put to vote in the Azerbaijani parliament.
According to chairman of the Committee on Natural Resources, Energy and Ecology, chaired by MP Valeh Alasgarov, the context of the agreement does not differ from the text of today: “However, several annexes have been made in the agreement. The agreement on the joint development and production sharing (PSA) for the Azeri, Chirag fields and the Deep Water Portion of the Gunashli Field (ACG) in the Azerbaijan Sector of the Caspian Sea was signed on September 20, 1994. Total costs within this project have made up $43.5 billion since 1994 till 2017. Capital expenditures within this agreement amounted to $35 billion. During the period of this agreement, Azerbaijani side received $130 billion as profit oil. Profit tax by co-ventures stood at $15 billion. ACG got nearly $6 billion in profit. Nearly 42 bcm of gas was delivered to Azerbaijan government”.
Alesgerov noted that volume of extractable reserves amount to 500 million tonnes.
“More than $33 billion is needed for production of oil reserves. The contract signed in 1994 will expired after seven years. The contractor companies would not invest a large amount of funds for this period. Because it’s impossible to get the expenditures back within seven years. If the works on explorations start in 2019, oil may be produced only in 2023. Current agreement expires in 2024. Therefore, there was a need for renewal of the agreement”.
He noted that ACG’s share increased up to 25 percent: “Total share of foreign companies increased to 75 percent. As you see the share of ACG doubled”.
Alesgerov noted that co-ventures will pay a bonus of $3.6 billion in total or $450 million in every year for the period of 8 years.
The new agreement will be valid till December 31, 2049.
MP Vahid Ahmadov said that September and October were successful months for Azerbaijan: “The new oil agreement was signed in September, BTK was launched in October. This is historic victory of Azerbaijan. There were many obstacles for realization of the BTK. However, under the will of the Azerbaijani president, this project was realized”.
MP Ali Masimli noted that the parliament is discussing very historic contract: “This contract introduced our hydrocarbon reserves to the world once more. At the same time, Azerbaijan proved itself as a country of oil”.
Discussions are underway.