Hess Corporation has completed the sale of its stake in an Azerbaijan oilfield to ONGC Videsh Ltd for $1 billion, the US energy major announced in a statement on Friday.
Hess said it has completed sale of its 2.72 per cent interest in the Azeri, Chirag and Guneshli fields (ACG) and its 2.36 per cent interest in the associated Baku-Tbilisi-Ceyhan (BTC) pipeline to OVL.
"Adjusting for net cash flow received since the January 1, 2012 effective date of sale, after tax net proceeds are $884 million," the statement said.
The BP operated ACG fields, located in the Caspian Sea, about 62 miles east of Baku, commenced production in 1997. OVL, the overseas arm of state-owned Oil & Natural Gas Corp (ONGC), would get about 1 million tonnes per annum of oil for about a decade from the fields.
"This sale is another step in the execution of our strategy to become a more focused, higher growth, lower risk pure play exploration and production company," said John B Hess, chairman and CEO of Hess Corp.
"Consistent with our announcement on March 4, the after tax net proceeds from this sale will be used to pay down an equivalent amount of short term debt," he added.
In addition to oil revenue, the investment would enable OVL to enter into Azerbaijan, which is rapidly emerging as a strategically important country in the CIS region.
BTC pipeline, which transports crude oil from Azeri capital city of Baku to the Mediterranean port of Ceyhan in Turkey via Georgia, would provide OVL the opportunity to enhance its portfolio around the region and transport crude from assets it may acquire in the Caspian Sea in future.
ACG, which is located in the south Caspian Sea, about 95 km off the coast of Azerbaijan, is the largest oil and gas field complex in Azerbaijan and one of the largest producing oil fields in the world.
The UK's BP Plc operated field produces around 700,000 barrels a day (35 million tonnes per annum) of crude oil. This is more than India's annual oil production.
OVL's share of output would be over 19,000 bpd or a little less than one million tonnes per annum.
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 1.0 million bpd.
BP plc holds 34.1 per cent stake in the ACG fields.
Other partners include Chevron (10.2 per cent), State Oil Company of Azerbaijan Republic (SOCAR 10 per cent), Inpex (10 per cent), Norway's Statoil (8.6 per cent), ExxonMobil (8 per cent), Turkish national oil company TPAO (6.8 per cent), Chevron (5.6 per cent) and Japanese Itochu (3.9 per cent).