State-run Oil and Natural Gas Corporation Videsh Limited (OVL) on Saturday announced that it had bought US energy company Hess Corp’s stake in in Azeri, Chirag and Guneshli (AGC) group of oil fields for $1 billion making its debut in Azerbaijan.

"OVL has signed definitive agreements for the acquisition of Hess Corp's 2.7213 per cent participating interest in the Azeri, Chirag and the deepwater portion of Guneshli fields in the Azerbaijan sector of the Caspian Sea and 2.36 per cent interest in the Baku-Tbilisi-Ceyhan (BTC) pipeline for $1 billion," OVL said in a statement here terming the acquisition as strategic and tune with India’s energy security quest. The acquisition is subject to relevant government and regulatory approvals.

The buyout marks OVL's entry into oil rich Azerbaijan. 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. UK's BP Plc operated field produces around 700,000 barrels a day of crude oil. This is more than India's annual oil production. OVL's share of output would be over 19,000 bpd.

The statement further said the acquisition would bring 9 per cent additional proven reserves to OVL portfolio. While the AGC 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. UK's BP plc is the operator of the ACG fields with 34.1 per cent stake.

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).

ONGC and OVL chairman and managing director, Sudhir Vasudeva said the transaction is the first step towards achieving this goal. "The production from this asset during 2011-12 was about 15 per cent of OVL's crude oil production during the same period," he added. As part of the deal, the company will also buy Hess' 2.36 per cent stake in BTC export pipeline.

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