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. Last Updated: 07/27/2016

Azerbaijan Nears Multi-Billion Oil Contract

Azerbaijan plans to sign Tuesday a multi-billion-dollar deal with a consortium of foreign oil companies to develop three Caspian Sea fields.

President Haydar Aliyev told reporters the signing ceremony, crowning years of tortuous negotiations, would take place in Baku on Sept. 20.

"The contract with the consortium of Western oil companies for development of the Azeri and Chirag offshore fields, as well as the deep-water part of the Guneshli deposit, will be signed on Sept. 20," the Azeri news agency Turan quoted him as saying over the weekend.

The Western consortium, with a combined 70 percent stake in the deal, includes British Petroleum/Statoil, Amoco, Pennzoil, Ramco, Unocal, McDermott and Turkish Petroleum. The Azeri state oil company, SOCAR, has 20 percent and a Russian conglomerate, Lukoil, has 10 percent.

Aliyev said the deposits would produce 511 million tons of oil over the 30-year development period for a total investment of $7.14 billion. It was not clear when work would begin. The fields have estimated recoverable reserves of about 400 million tons, or 3 billion barrels.

Turan quoted Aliyev as saying that Azerbaijan, the third largest oil producer in the former Soviet Union, would reap profits of $34 billion from the project. The agency said the signing bonus to be paid to Azerbaijan totalled $300 million.

Azerbaijan's share of oil produced from the Caspian fields will be about 253 million tons, Turan said.

Output was expected to start within 18 months of start-up and peak after 11 years at 30 million tons a year, it said.