Hungary MVM buys stake in one of the world's largest offshore natural gas fields
The company has published the following statement on its own website, the website of the Budapest Stock Exchange and the Dublin Stock Exchange.
"On 5th June 2024, MVM Group entered into a sale and purchase agreement with the Azerbaijani state-owned entity Southern Gas Corridor CJSC (“SGC”) for the acquisition of a 5% stake in the Production Sharing Agreement for Shah Deniz offshore gas-condensate field in the territory of Azerbaijan and a 4% stake in Azerbaijan Gas Supply Company Limited (“AGSC”), the exclusive special-purpose vehicle established for the marketing and sale of natural gas produced from Shah Deniz gas-condensate field.
"The Shah Deniz is one of the world’s largest natural gas-condensate fields and was discovered in 1999. The field is located on the deepwater shelf of the Caspian Sea, approximately 70 km southeast of Baku. The Shah Deniz project is set up as an unincorporated joint venture partnership operated by BP.
"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.
"The extracted natural gas is delivered from the offshore gas-condensate field via pipelines to Azerbaijani, Georgian, Turkish and European partners based on long-term gas sales and transportation agreements concluded with AGSC.
"By acquiring a stake in the Shah Deniz gas field, MVM Group will cooperate with SGC and leading global energy companies such as BP (29.99%), Lukoil (19.99%), TPAO (19%) and NICO (10%) in the unincorporated joint venture.
"The transaction is fully in line with the diversification efforts of the European Union, as well as with the national energy strategy and the growth strategy of MVM Group. The closing of the transaction, when MVM Group shall acquire ownership, is expected to take place in Q3’2024 after the satisfaction of customary conditions precedent."
Minister of Foreign Affairs and Trade Péter Szijjártó stated that this is "a historically new situation for Hungary's energy supply", and thus provides Hungary with a much greater degree of protection against "major energy market price movements and uncertainties".
The minister stressed that this year three important milestones have been reached in the relationship between the two countries:
- Hungary purchased natural gas from Azerbaijan for the first time this year, in the amount of 50 million cubic metres, and both sides are ready to continue cooperation. An agreement to supply 100 million cubic metres of natural gas was announced last summer between the two countries' energy suppliers, and it was already agreed at the time that this could form the basis for a long-term gas purchase contract of around 2 billion cubic metres per year.
- In July this year, a joint venture between Azerbaijan, Georgia, Romania and Hungary will be set up to bring green energy from the Caspian region to Central Europe. This was announced late last year, and a pipeline will be built to supply green electricity to the region.
- The value of investments by energy group Mol in Azerbaijan has reached USD 2 billion, making the Hungarian company the third largest owner of the largest offshore oil field in the South Caucasus country.
Szijjártó said that last year Mol's share of oil production was more than five million barrels, which represents 15% of the company's group production.
And as a continuation of this cooperation, negotiations have started between Mol and SOCAR on a framework contract for the purchase of liquefied natural gas,
he added.
Cover photo: Portfolio
