The Hungarian oil firm MOL Group is a new shareholder in the Azeri-Chirag-Gunashli (ACG) offshore oilfield of Azerbaijan, taking over the shares of what previously belonged to the American energy giant Chevron.
In a statement released Monday, officials from MOL announced that the deal with Chevron gives it a 9.57 percent stake in the ACG field and an effective 8.9 percent stake in the Baku-Tbilisi-Ceyhan oil pipeline.
“This major USD $1.57bn transaction is a significant milestone in building our international E&P portfolio, in one of our core regions, the CIS, where we will team up with world-class partners,” Zsolt Hernádi, MOL Group’s Chairman and CEO, said, according to a statement posted to the company’s website. “Following the closing of the deal, around half of our production will come from outside the CEE region, giving us a healthy balance.”
The agreement follows the finalization of Chevron’s move from the Central Asian markets after 25 years of operation, aimed at repositioning itself in domestic production in the United States.
Acquiring shares in ACG is expected to add 20,000 barrels of crude oil per day to MOL’s production, bringing the company’s overall production up to 120,000-130,000 barrels per day (bdp). The Hungarian company is hoping to operate a total of 350 million barrels of oil and gas reserves by 2023.
Discovered in the 1970s when Azerbaijan was part of the Soviet Union, the ACG field is the country’s largest oil deposit trapped beneath the Azerbaijani sector of the Caspian Sea. The crude oil extracted from the field makes up 80 percent of Azerbaijan’s overall oil output. Oil from ACG is delivered via a subsea pipeline network to the Sangachal terminal, located 55 kilometers (34 miles) south of Baku. From there, the processed oil is pumped to foreign markets through Baku-Supsa, Baku-Novorossiysk and Baku-Tbilisi-Ceyhan pipelines.
The average production rate at the field in 2018 stood at around 584,000 barrels per day. The overall reserves of the ACG field are estimated to be at 730 million tons.
MOL Group’s current portfolio includes production activities in eight countries, including in Hungary, Slovakia, Croatia, Iraq and Russia, and exploration assets in 13 countries across Central and South-Eastern Europe. The ACG field in Azerbaijan is the fourteenth asset in the company’s upstream portfolio. The company’s stake in ACG is expected to generate half of the company’s upstream production outside Central & Eastern Europe.
“The ACG deal marks the beginning of a new chapter in MOL’s [exploration & production] story as we take a significant step to deliver on our promise of inorganic reserve replacement,” said Berislav Gaso, MOL Group’s Executive Vice President for Upstream.
“By completing the ACG acquisition we are well-positioned to preserve the excellent cash-flow generation ability of MOL’s E&P business for an extended period,” he said. “With this transaction, we are continuing MOL E&P’s transformation to international business, as promised in our MOL 2030 Strategy.”