PSA Extension for Azeri-Chirag-Gunashli Oil Field in Azerbaijan

September 14, 2017

Itochu Corporation (headquarters: Minato-ku, Tokyo; President and CEO: Masahiro Okafuji; hereinafter “ITOCHU”) is pleased to announce that its wholly owned subsidiary, ITOCHU Oil Exploration (Azerbaijan) Inc., has agreed to extend the Production Sharing Agreement (“PSA”) for the Azeri-Chirag-Gunashli (“ACG”) field with the State Oil Company of the Republic of Azerbaijan (“SOCAR”). The agreement was signed today and will be effective upon ratification by the Azerbaijan Parliament.

The term of the agreement, which commenced in 1994 and was due to expire in 2024, has been extended for an additional 25 years to the end of 2049. As part of the agreement, SOCAR will increase its equity share from 11.65% to 25.00%. ITOCHU holds a total 4.30% share under the existing agreement, which will become 3.65% upon completion of the extended PSA. (*)

The ACG oil field is located approximately 100 km east of Baku, Azerbaijan, in the Caspian Sea. The field’s cumulative production to date has reached around 3.2 billion barrels and it produced an average of 585,000 barrels per day in first half of 2017. The oil produced from the field is delivered to the Sangachal Terminal near Baku, and then transported through the BTC Pipeline, in which ITOCHU participates, to Ceyhan on Turkey’s Mediterranean coast via Tbilisi, Georgia, for export.

Through this transaction, ITOCHU aims to strengthen its long-term upstream energy portfolio.

  • *New participating interests of other shareholders in the ACG venture are BP (Operator, 30.37%), SOCAR (25.00%), Chevron (9.57%), INPEX (9.31%), Statoil (7.27%), ExxonMobil (6.79%), TPAO (5.73%), and ONGC Videsh Limited (2.31%).