Equinor sells Azerbaijan interests to SOCAR

Equinor ASA and State Oil Co. of Azerbaijan Republic (SOCAR) have reached an agreement by which Equinor will divest all its remaining assets in Azerbaijan to SOCAR. The assets comprise a 7.27% non-operated interest in the Azeri Chirag Gunashli (ACG) oil fields in the Azerbaijan sector of the Caspian Sea, an 8.71% interest in the 1.2-million b/d Baku-Tbilisi-Ceyhan (BTC) crude oil pipeline, and 50% of the Karabagh oil field.

SOCAR already holds a 25% stake in ACG, a 25% stake in BTC via Azerbaijan BTC Ltd., and the other 50% of Karabagh. ACG, operated by bp PLC, is the largest oil field in the Azerbaijan sector of the Caspian basin and BTC is used to transfer Caspian production from the Sangchal terminal near Baku, Azerbaijan, to the Ceyhan marine terminal on the Turkish Mediterranean coast.

ACG is 100 km east of Baku in water depths of 125-180 m. Estimated total recoverable resources 2018-49 are 3 billion bbl. Karabagh oil field, 20 km further into the Caspian, was discovered by SOCAR and Equinor in 2020 (OGJ Online, Mar. 24, 2020). At the time of discovery, SOCAR estimated Karabagh’s oil reserves at “more than 60 million tons” (~1.4 billion bbl).

In advance of the transaction, analysts estimated its value at roughly $1 billion. Media reports in its wake said that Equinor, which did not report terms of the agreement, would record a loss. Closing is subject to the satisfaction of certain conditions including all regulatory and contractual approvals.

The two companies also signed an MOU to share experience and best practices on low-carbon solutions, reducing greenhouse gas emissions, and carbon management.