Page 8 - FSUOGM Week 44 2019

FSUOGM INVESTMENT FSUOGM
Hungary’s MOL buys into ACG project
AZERBAIJAN
The purchase will add 360-380mn barrels to MOL’s proven and probable reserves.
HUNGARIAN oil firm MOL is poised to land a stake in Azerbaijan’s biggest oil project through a $1.57bn deal with US major Chevron.
MOL said on November 4 it had struck a deal to buy Chevron’s 9.57% stake in the Aze- ri-Chirag-Gunashli (ACG) oil project – a clus- ter of oilfields operated by BP in the Caspian Sea. It will also secure Chevron’s 9.6% share in the Baku-Tbilisi-Ceyhan (BTC) pipeline, used to pump ACG’s oil to the Mediterranean coast where it can be loaded onto tankers for export.
MOL will pay Chevron $1.57bn for the assets, with the sale due to close in the second quarter of 2020 once it is cleared by regulators. It will then be backdated to January 1 this year.
In a statement, MOL CEO Zsolt Hernadi described the deal as a “significant milestone” in the company’s drive to build up its international exploration and production business. MOL will add around 360-380mn barrels per day of oil equivalent to its proven and probable reserves through the purchase, while also netting a 9.57% share of ACG’s output, which reached 584,000 barrels per day last year.
“With these new barrels we are also strength- ening our resilient, integrated business model, which will continue to generate robust cash flow to finance the MOL 2030 transformational pro- jects as well as rising dividends to our sharehold- ers,” Hernadi said.
Reports first emerged that MOL was seeking Chevron’s share at ACG last month. Fellow US oil firm ExxonMobil is also looking for a buyer for its 6.8% stake, having hired Bank of America Merrill Lynch to handle the process. The pair first entered Azerbaijan shortly after it declared its independence from the Soviet Union in 1991, but are now looking to shed non-core interna- tional assets to focus more on domestic shale oil.
ACG has been in production since 1997 and is now past its prime, with output steadily declining. However, the project still enjoys low production costs, and BP and its partners believe a further 3bn barrels of oil can be recovered from the fields before their depletion. They recently approved a plan to add a seventh platform at the site at a cost of $6bn, and have discussed the development of ACG’s deeper gas reservoirs.™
Socar finalises takeover of Russian oil refinery
RUSSIA
Socar has no major assets in Russia, but wants to build its operations there as part of plans to diversify away from domestic oil production.
AZERBAIJAN’S national oil company Socar has become a shareholder in Russia’s largest inde- pendent oil refinery, marking its foray into the country’s refining sector.
Socar said on October 31 it had completed all necessary procedures to acquire a share in Socar Energoresurs, which in turn owns an 80% stake in the 180,000 barrel per day Antipinsky refin- ery in Western Siberia. It has also gained inter- ests in three Russian oilfields with 45mn tonnes (330mn barrels) of proven reserves though the transaction.
The Antipinsky refinery has endured sev- eral difficult years, highlighting the hard- ship that independent operators can face in Russia’s oil industry. It was formerly owned by privately owned New Stream Group, con- trolled by now-jailed businessman Dmitry Mazurov. The plant ran into difficulties last year, after a long period of low fuel prices in Russia left it unable to service debts it had taken out to fund costly new investments. Its problems were exacerbated by recent tax
changes in Russia that have driven up the domestic cost of oil.
The refinery began struggling to afford oil supplies needed to stay in operation and was forced to shut down completely in May. It filed for bankruptcy later that month and in June its largest creditor, state-owned Sberbank, announced it had banded together with a group of investors to form a joint venture, Socar Ener- goresurs, that had acquired New Stream’s 80% stake. Only now has Socar become a shareholder in Socar Energoresurs. The identity of the stop- gap investors is unknown. The plant resumed operations in August.
Socar said it would bring “managerial exper- tise” to the enterprise, noting it would not be responsible for the plant’s previous debts. Until now the company had no large-scale assets in Russia, with its activities in the country confined to a small oil trading operation. It is on a push to acquire more overseas assets to diversify away from oil production in Azerbaijan, which is in decline. ™
P8
w w w . N E W S B A S E . c o m Week 44 06•November•2019