Two established partners in the Shah Deniz consortium in Azerbaijan have made a move to acquire part of the 15.5% stake that Malaysia’s Petronas has agreed to sell to Russia's Lukoil.
UK supermajor BP said it will use a pre-emptive right to purchase an additional 1.16% shareholding in the project from Petronas for $168 million.
Another partner in the project, Azerbaijan's state oil and gas producer Socar, has moved to buy an extra 4.35% shareholding for an undisclosed amount.
Lukoil said that, as a result of the moves by BP and Socar, the stake to be acquired by the Russian company will drop to 9.99%, with its payment to Petronas reduced to $1.45 billion from the agreed $2.25 billion.
The revised Lukoil costs figures imply that Socar paid $642 million, but this could not be confirmed.
Once the deal gains the remaining regulatory approvals and closes in January 2022, BP will hold a 29.99% interest in Shah Deniz and retain its operatorship.
Lukoil’s shareholding will increase to almost 20%, with Socar’s direct interest rising to 14.35%.
Azerbaijan's Ministry of Economy and Socar also hold stakes of 51% and 49%, respectively, in pipeline operator Southern Gas Corridor, which handles gas exports from the project.
Southern Gas Corridor has a 6.67% stake in Shah Deniz.
The two remaining partners in Shah Deniz — Turkey 's TPAO and National Iranian Oil Company — opted out of increasing their project stakes of 19% and 10%, respectively.
According to Socar, the Shah Deniz partners will also see corresponding upward adjustments in their shareholdings in South Caucasus Pipeline company once the equity transactions with Petronas are completed.
South Caucasus Pipeline company owns and operates the initial 690-kilometre section of a gas export trunkline in Azerbaijan and Georgia that then crosses into Turkey, Greece, Albania and across the Adriatic Sea before reaching southern Italy.
According to a recent forecast from the Azerbaijani State Oil Fund, gas production at Shah Deniz is expected to increase by 7% to 22.8 billion cubic metres in 2022, compared to 2021, with annual condensate production at the asset also rising by almost 5% to over 33 million barrels.
Since December last year, Shah Deniz has been delivering gas to southern Europe via the Trans Adriatic Pipeline (TAP), which is the final section of Southern Gas Corridor.
Together with TAP, the Southern Gas Corridor is a 3500-kilometre pipeline system from Azerbaijan’s portion of the Caspian Sea to southern Europe.
It can transport 10 Bcm per annum of gas supplies from Azerbaijan to Europe, with additional deliveries to other host countries. The export capacity to Europe may eventually be increased to 20 Bcm per annum.
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