MOL Group and its joint venture (JV) partners have signed commercial agreements for the development of gas reserves in Azerbaijan. MOL is the third largest shareholder after SOCAR and BP in the giant ACG field, where non-associated gas reservoirs have been identified below and above producing oil reservoirs. The partners have now agreed to develop and commercially exploit these reserves. MOL has also signed a Memorandum of Understanding (MoU) with SOCAR to explore further potential cooperation opportunities in the field of hydrocarbon exploration in Azerbaijan.
MOL Group and its JV partners have signed commercial agreements for the development of gas reserves in Azerbaijan. After the State Oil Company of the Republic of Azerbaijan (SOCAR) and BP, the operator of the JV, MOL is the third largest shareholder in the giant Azeri-Chirag-Deepwater Gunashli (ACG) field, where non-associated gas (NAG) reservoirs have been identified below and above the oil producing reservoirs.
The commercial agreements amend the existing ACG Production Sharing Agreement (PSA) framework and allow the parties to proceed with the exploration, appraisal, development and production of gas from the ACG field. The non-associated gas resources at ACG are believed to be significant, with up to 4 trillion cubic feet (approximately 112 billion cubic metres) in place.
Drilling of the first producing well from the West Chirag platform has already commenced, with first gas expected in 2025. The well is important as it will provide appraisal through to production, which is expected to underpin future development plans.
The MOL Group entered Azerbaijan in 2020 by acquiring a 9.57% stake in Azeri-Chirag-Gunashli (“ACG”), one of the world’s largest oil fields, and an effective 8.9% stake in the Baku-Tbilisi-Ceyhan (“BTC”) pipeline, which transports crude oil to the Mediterranean port of Ceyhan. This stake represents 15% of MOL’s total production and 25% of its total reserves by 2023. The BTC pipeline plays an important role in supplying MOL’s refineries in Central and Eastern Europe, including Slovnaft’s Bratislava refinery and INA’s Rijeka refinery.
The Azeri asset gives MOL the flexibility to decide whether to sell its share of the oil produced at ACG in the port of Ceyhan to third parties or to use it within MOL Group in its core CEE region, contributing to European energy security and improving the company’s crude oil sourcing flexibility. Despite being a minority shareholder, MOL is actively contributing to ACG’s development with its eight decades of experience in reservoir management, subsurface and production optimisation.