Total is in talks to sell its stake in a huge gasfield in Azerbaijan after it baulked at the enormous cost of the project, which would deliver Caspian gas directly to European markets for the first time.
The French major is likely to sell its entire 10 per cent stake in the Shah Deniz field, according to people familiar with the situation. The move comes just months after fellow investor Statoil of Norway reduced its stake from 25.5 per cent to 15.5 per cent.
The consortium of shareholders in the field, led by BP, in December announced a final decision to invest $28bn on the second phase of its development, one of the largest gas projects in the world.
They also announced plans to build pipelines to ship the gas 3,500 kilometres across Turkey, Greece and Albania into Italy, making the project a crucial plank of Europe’s strategy to diversify energy supplies.
Total’s decision was driven by the economics of the project, the people said, as well as a broader asset sale programme which is targeting $15bn-$20bn of disposals between 2012 and 2014. It is not unusual for oil groups to reduce their stakes in large projects ahead of big capital expenditures, the people added.
Including the cost of building the pipelines, the total price tag for the project is likely to exceed $40bn.
Total remains committed to its other large gas project in Azerbaijan, Absheron, in which it holds a 40 per cent stake, the people said. However, it sees as “non core” its 10 per cent interest in the Trans Adriatic pipeline that would transport Shah Deniz gas from Turkey to Italy.
Likely buyers for Total’s stake include BOTAS, the Turkish state pipeline company, which “has been very interested for a long time in getting involved in the upstream end of the project”, according to one person familiar with the matter. SOCAR, the Azeri national oil company, may also be interested in buying the stake, another person added. Statoil’s 10 per cent stake was sold to BP and SOCAR for $1.45bn.
Other than Total, BP, Statoil and SOCAR, the shareholders in Shah Deniz include Russian major Lukoil and the state oil companies of Turkey and Iran.
Total and BP declined to comment; Socar did not respond to a request for comment; and BOTAS could not be reached. News of Total’s plans was first reported by Nefte Compass, an industry publication.