Baku/London—Global law firm Dentons has advised the State Oil Company of the Azerbaijan Republic (SOCAR) on an addendum to the existing production sharing agreement (PSA) with bp, MOL, INPEX, Equinor, ExxonMobil, TPAO, ITOCHU and ONGC Videsh for development of the non-associated natural gas (NAG) reservoirs in the Azeri-Chirag-Deepwater Gunashli (ACG) field. Located approximately 100km east of Baku, ACG is the largest oilfield in the Azerbaijan sector of the Caspian Sea basin.

The addendum amends the ACG PSA to enable the parties to explore, appraise, develop and produce from the ACG field’s NAG reservoirs of up to 4 trillion cubic feet of gas. The addendum is effective until the end of the existing ACG PSA in 2049. The deal could result in the investment of billions of dollars into the development of NAG reservoirs of the ACG field over the next 25 years.

The participating interests of the parties remain the same as in the existing ACG PSA: bp (30.37%), SOCAR (25.0%), MOL (9.57%), INPEX (9.31%), Equinor (7.27%), ExxonMobil (6.79%), TPAO (5.73%), ITOCHU (3.65%), ONGC Videsh (2.31%). bp remains the operator of the ACG PSA. 

The original production sharing agreement, dubbed the “Contract of the Century”, was signed in 1994. Since then, approximately US$45 billion of investment has been made into the development of the ACG field, which has produced approximately 4.4 billion barrels (around 593 million tons) of oil.

Dentons advised SOCAR on all the corporate and energy regulatory aspects of the deal, including the negotiation of the addendum and the gas sale and purchase agreement for the initial production from the NAG reservoirs. Senior counsel Jon Hines (Europe), partner Kamil Valiyev (Baku), partner Humphrey Douglas and senior associate Torquil Law (both London) led the cross-border, multi-competency team, which included partner Dan Bodle, senior practice development lawyer Alexander Hewitt, associates Bethan McGarva, Alexandra Velizarova and Adjoa Kwakwa, and trainee Katja Obed in London, as well as counsel Bakhtiyar Mammadov, senior associate Rena Eminova, and junior associate Tofiga Jamalzade in Baku.

Jon Hines commented, “We are most honored to have supported SOCAR on this landmark gas deal, which is highly strategic for diversifying Azerbaijan’s energy resources and will help strengthen the country’s position as a key energy supplier to Europe.”

Kamil Valiyev said, “Dentons has supported state institutions and multinational companies in many major projects in Azerbaijan for over 25 years as an international law firm. We are delighted to have contributed to this significant accomplishment for the further development of the Azerbaijani economy.”

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