Russia’s private company LUKOIL isacquiring a 25% participating interest in the Shallow Water Absheron Peninsula (SWAP) exploration project operated by bp and located in the Azerbaijan sector of the Caspian Sea.
The announcement of the deal in Baku this afternoon broke as a bit unexpected.
Although over the past year the head of the Russian company Vahid Alakbarov in his interviews had more than once voiced his thoughts about expanding their projects in Azerbaijan, many had thought what he had in his mind was to purchase a stake in “Dostlug” – a joint project of Azerbaijan and Turkmenistan. And all of a sudden LUKOIL’s joining an exploration project in Azerbaijan acquiring half of the operator’s participating interest has caused some sort of speculative social media discussions.
To bring some clarity to the details of the deal and to dispel the concern the news may have caused in some parts of the society I decided to talk to Bakhtiyar Aslanbayli, bp’s Vice President for the Caspian region, Communications and Advocacy.
– Why are you selling this much interest in SWAP?
– We have decided to hold a 25% equity share with a belief that this will enable us to evenly distribute our investment potential in Azerbaijan and to redeploy capital to other areas of our business in line with our strategy. Also, we will remain the operator during the exploration period and this allows us to hold a material position in the asset, which is consistent with our ACG (30.4%) and Shah Deniz (28.8%) participating interests.
– What is the price of the deal?
– We do not discuss the commercial terms of the deal.
– Don’t you believe any longer in the perspectivity of this area?
– While we are still drilling the first well and will have to wait for the results, based on our early assessments, we believe that SWAP is an opportunity for material, conventional hydrocarbons production. It also allows us to join our efforts with SOCAR and LUKOIL to ensure Azerbaijan’s long term energy future through exploring new opportunities. We remain committed to exploring the SWAP area and to our long-term partnership with Azerbaijan. As operator of the exploration period of SWAP we are excited about the three exploration prospects that we will drill, which, if successful, will deliver value to Azerbaijan and to our partnership.
– Is this the start of your divestments in Azerbaijan?
– In Azerbaijan, we are the operator of the country’s biggest hydrocarbon production projects and have built one of the most successful partnerships in the world. We in bp are proud to have been operating in the region safely and reliably for almost three decades.
Our business in Azerbaijan, including SWAP, is an excellent example of resilient hydrocarbons, offering stable long-term returns. These projects are very important to bp and are in line with our new strategy. Hydrocarbon business is the engine of our company enabling us to deliver our strategy and helping new businesses grow. We will continue to focus on resilient hydrocarbons business here for the next three decades generating cash for Azerbaijan and the cash to enable us to transform into an integrated energy company.
– Do you have any other investment / divestment plans for AGT?
– We are committed to Azerbaijan and are proud of our partnership with the government and SOCAR. Our projects here play a significant role generating cash to support our transition into an integrated energy company. We have further investment plans here for ACG, Shah Deniz and the exploration opportunities that we are involved in.
We also intend to focus on other diverse energy production options in Azerbaijan. We believe there are great opportunities in Azerbaijan for us to embark on new areas of partnership through which bp can make an important contribution to Azerbaijan’s energy transition.
Ilham Shaban
