By BS Reporter
ONGC’s overseas arm, ONGC Videsh Ltd (OVL), has bought US energy company Hess Corp’s stake in a producing Azerbaijan field and the Baku-Tbilisi-Ceyhan (BTC) pipeline for $1 billion. This is OVL’s first acquisition in Azerbaijan and will help it offset the drop in production from Sudan and Syria, which pulled its output down by more than seven per cent in FY12.
“OVL signed definitive agreements for the acquisition of Hess Corporation’s 2.72 per cent participating interest in the Azeri, Chirag and the deepwater portion of Guneshli (ACG) fields in the Azerbaijan sector of the Caspian Sea and 2.36 per cent interest in the BTC pipeline for $1 billion,” the company said in a statement here. The acquisition is subject to the relevant government and regulatory approvals and is expected to be closed by the first quarter of 2013.
The acquisition marks OVL’s entry into the oil-rich Azerbaijan. Located in the south Caspian Sea, about 95 km off the coast of Azerbaijan, ACG is the largest oil and gas field complex in Azerbaijan and one of the largest producing oil fields in the world. A BP Plc-operated field there produces around 700,000 barrels a day (35 million tonnes per annum) of crude oil. That is more than India’s annual oil production. OVL’s share of output would be over 19,000 barrels a day or a little less than one million tonnes per annum.
“The acquisition would bring nine per cent additional proved reserves to OVL’s portfolio,” the statement said. While the ACG field has total reserves of over 6.5 billion barrels, the 1,768-km BTC pipeline is one of the main export routes for Caspian crude oil production to the Ceyhan terminal in the Mediterranean Sea in south-east Turkey, with a capacity of around one million barrels a day.
ONGC has recently formulated its 2030 Perspective Plan that envisages increasing OVL’s production to 20 million tonnes by 2018 and 60 million tonnes by 2030. It currently produces 8.75 million tonnes. The ONGC chairman and managing director said the acquisition was the first step towards that goal.
With today’s acquisition, OVL will have a portfolio of 11 producing, five discovered and 14 exploration assets spread across 16 countries.