Lukoil signed a deal worth $2.25 billion with Malaysian oil and gas company Petronas for acquiring an additional stake of 15.5% in the Shah Deniz gas project.

The Russian oil and gas company will be able to increase its stake in the offshore gas project from 10% to 25.5% through the deal.

Energy giant BP is the operator of the Shah Deniz gas project with a 28.8% stake, with Turkish Petroleum Corporation (TPAO with 19%), SOCAR (10%), Iran-based Naftiran Intertrade Company (NICO with 10%), and SGC Upstream (6.7%) being the other partners.

The Shah Deniz gas-condensate field, located 70 km southeast of Baku, had been producing since 2006.

The offshore field was discovered in 1999 and spans almost 860km2. Initially, the Shah Deniz field contained nearly one trillion cubic meters of gas, and a couple of billion barrels of condensate.

Last year, the Shah Deniz gas project had produced 18.1 million cubic meters (bcm), of natural gas alongside 3.6 million tonnes of gas condensate.

The gas produced from the Shah Deniz field is sold to the markets in Azerbaijan and Georgia as well as Turkey.

Vagit Alekperov — President of Lukoil said: “Around thousand Russian businesses, including Lukoil, are involved in implementation of the Action Plan for Development of Key Vectors of Cooperation between Russia and Azerbaijan, which was signed in 2018 during the meeting of the two national leaders. Increasing our share in the Shah Deniz project creates new opportunities for synergy in future-oriented economy sectors of our countries.

“Over 25 years, Lukoil accumulated enormous experience in the Caspian region, which we perceive as strategically important, as well as created extensive production and transport infrastructure.

“We are proud of the confidence placed in our competences by Caspian countries, which are among leaders of oil and gas production, regarding implementation of high priority international projects.”

In July 2021, BP and the partners in the Shah Deniz field brought the East South flank of the $28 billion phase 2 development on stream. Launched in 2018, the Shah Deniz 2 project is estimated to have an annual production of 26 bcm of gas and five million tonnes of gas condensate.

  Azerbaijan, BP, Caspian Sea, Lukoil, Oil and gas industry news, Oil and gas news, Petronas, Shah Deniz field, Vagit Alekperov