BP and partners sign Azerbaijan oil field extension deal

A consortium led by BP (LSE:BP) will continue to hold a presence in Azerbaijan after the British oil major announced it signed a contract with state energy firm SOCAR to extend its production sharing deal.

The existing deal was due to expire in 2024, but the extension will guarantee shareholders within the consortium the right to operate in the central Asian nation’s biggest oil fields until 2050.

Other shareholders in the consortium include Chevron, Inpex, Statoil, ExxonMobil, TPAO, Itochu and ONGC Videsh.

The agreement also rubberstamped BP and SOCAR’s pledge to continue developing the giant Azeri-Chirag-Guneshli (ACG) offshore fields.

The ACG fields are currently the largest in the Azerbaijan sector of the Caspian basin and have received around US$33 billion of investment since the first agreement was signed in 1994.

“Over the past 23 years the ‘contract of the century’ has truly transformed Azerbaijan, energy supplies to Europe and all of us who have worked so hard to make it a success,” said Bob Dudley, BP’s group chief executive.

“Today’s contract is perhaps an even more important milestone in the history of Azerbaijan as it ensures that over the next 32 years we will continue to work together to unlock the long-term development potential of ACG.”

Additionally, all parties within the consortium will pay a bonus of $3.6 billion to the Azerbaijan government under the new contract.