Hungarian energy firm MOL is acquiring a 9.57% stake in the Azerbaijan ACG (Azeri-Chirag-Gunashli) oil field and 8.9% stake in the BTC (Baku-Tbilisi-Ceyhan) oil pipeline, the company told Hungarian news wire MTI on Monday.
The deal is not surprising, as there have been several rumors earlier about the transaction. Reuters reported in October that both Chevron and its larger U.S. rival Exxon Mobil, are seeking to sell their stakes in the BP-operated ACG field in the Caspian Sea. MOL was already in talks to acquire Chevron’s stake at that time.
The current deal with Chevron is worth 1.57 billion dollars, which MOL will finance from available liquid funds.
With the acquisition of the US company’s Azerbaijani interests, MOL will be the third largest partner in BP-operated ACG, Azerbaijan’s largest strategic oil field. The MOL Group will become a partner of major oil companies such as BP, Exxon, Equinor, and Socar.
MOL will also acquire a stake in the BTC pipeline, which transports crude oil from Azerbaijan to Ceyhan, one of Turkey’s Mediterranean ports.
The acquisition of the oil field contributes to MOL’s annual hydrocarbon production of 20,000 barrels per day in the coming years and significantly increases the company’s proven and probable oil reserves.
The transaction is subject to government and regulatory approvals and is expected to end in the second quarter of 2020.
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The reserve-rich ACG field is located in the Caspian Sea, where it has been producing oil since 1997 and is one of the world’s largest offshore oil fields.
The deal comes as the Hungarian government is seeking to establish close relations with central Asian countries like Azerbaijan.
It has been a topic for years that MOL still wants to maintain production levels above 100,000 barrels of oil per day, which could be a kind of diversification to the cyclical nature of the refining segment.
According to news site index.hu, since MOL had been more of a refinery company thus far, the narrowing refining margins could cause them problems. The new production unit, on the other hand, could result in a more balanced portfolio and a better position in case of high oil prices.
Featured photo illustration by Tamás Sóki/MTI