New Delhi, Jan 31 (IANS) A cabinet panel Thursday approved overseas explorer ONGC Videsh Ltd's (OVL) acquisition of participating interest in Hess Corporation's wholly-owned subsidiaries in upstream and midstream oil and gas assets in Azerbaijan.
OVL had in September announced its signing of definitive agreements for acquiring US firm Hess Corporation's 2.72 percent participating interest in the Azeri, Chirag and Guneshli (ACG) oil fields in the Azerbaijan part of the Caspian Sea and 2.36 percent interest in the Baku-Tbilisi-Ceyhan Pipeline (BTC) for $1 billion.
An official statement here said the Cabinet Committee on Economic Affairs (CCEA) "authorised OVL to incur expenses so as to keep the total exposure up to the approved amount $1,001 million at all times".
The acquisition would mark OVL's entry into oil-rich Azerbaijan and would provide the company oil production of around one million tonnes per year for a decade.
The ACG fields, located in the south Caspian Sea about 95 km off the coast of Azerbaijan, are the largest oil and gas field complex in that country and is one of the largest producing oil fields in the world.
Britain's BP operates ACG in partnership with the State Oil Company of Azerbaijan Republic (SOCAR), Chevron, Statoil, ExxonMobil, Inpex, Turkish NOC -TPAO and Itochu.
Average daily production from the field is around 700,000 barrels of oil per day (bopd) and OVL's share of output would be over 19,000 bpd.
According to the company, this acquisition would bring nine percent additional proven reserves to OVL's portfolio.
As part of the deal, OVL will also buy Hess Corporation's 2.36 percent stake in the BTC export pipeline. The 1,768-km pipeline with a capacity of around 1 million bopd transports crude from the Azeri capital Baku to the Ceyhan terminal in the Mediterranean Sea in southeast Turkey.
"Acquiring a stake in the strategic BTC pipeline would provide OVL the opportunity to enhance its portfolio around the region and transport crude from future assets, which the company may acquire in the Caspian Sea in the future," the statement said.