Hungary's MVM Group buying 5% stake in Shah Deniz project from Azerbaijan's Cenub Qaz Dehlizi

BAKU. June 5 (Interfax) - Hungary's MVM Group has entered into an agreement to buy a 5% stake in the Shah Deniz gas-field development project in Azerbaijan's sector of the Caspian Sea and a 4% stake in South Caucasus Pipeline Company (SCPC), which is responsible for operating the South Caucasus main pipeline, MVM Group said in a press release.

MVM Group said that it was acquiring the stake in the Shah Deniz project from Azerbaijan's Cenub Qaz Dehlizi, and the 4% stake in SCPC from Azerbaijan Gas Supply Company Limited (AGSC).

The deal is expected to close in the third quarter of 2024.

The stake held by Cenub Qaz Dehlizi in Shah Deniz will fall from 21.02% to 16.02% and that held by AGSC in SCPC from 21.02% to 17.02%.

Shah Deniz facilities can produce up to 29 billion cubic meters of natural gas and roughly 60 million barrels of condensate annually. "The field has significant hydrocarbon reserves and has been producing reliably and steadily for almost 20 years. A total of more than 218 billion cubic meters of natural gas and 371 million barrels of condensate have been produced from the field since inception," MVM said.

The contract to develop the Shah Deniz field was signed in Baku in 1996. Equity participation in the contract is currently as follows: BP plc , operator, with 29.99%; Azerbaijan's Cenub Qaz Dehlizi with 21.02%; Lukoil with 19.99%; TPAO with 19%; and NICO with 10%.

Shah Deniz produced 26 billion cubic meters of natural gas and over 4 million tonnes of condensate in 2023, and the production forecast for 2024 is 27.1 bcm of gas and 4.1 million tonnes of condensate.

BP-Azerbaijan produced 7 bcm of gas and over 1 million tonnes of condensate at Shah Deniz in Q1 2024, in each case level with Q1 2023.

Other SCPC shareholders are BP with 29.99%, Lukoil - 19.99%, TPAO - 19% and NICO - 10%.