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. Last Updated: 07/27/2016

LUKoil Sells Stake in Azeri Field for $1.4Bln

Top oil producer LUKoil said on Friday it will sell its stake in a key Azeri oil field to Japan's unlisted Inpex for $1.375 billion in one of the biggest transactions in Russian corporate history.

LUKoil said in a statement it will sell a 10 percent stake in Azeri-Chirag-Guneshli, Azerbaijan's most successful and only producing oil field.

The statement said LUKoil wanted to focus on projects where it held majority stakes.

The ACG project is a major source of crude for the planned $2.9 billion major U.S.-backed pipeline from Azerbaijan to the Turkish Mediterranean port of Ceyhan.

The ACG project is operated by BP.

LUKoil's statement quoted Inpex as saying the Japanese firm was glad to join the BP-led project in the Caspian Sea, seeing it as one of the world's richest oil and gas regions.

LUKoil said in November it would sell the stake to an unnamed Japanese firm for at least $1.25 billion but only after the project's participants, including BP, decided not to exercise their pre-emption rights and buy the stake first.

The project also involves U.S. giant ExxonMobil, Azeri state oil firm SOCAR, Norway's Statoil, U.S. Unocal, Turkish TPAO and Japan's Itochu.

Analysts praised the deal, saying LUKoil managed to sell its stake at the right time and at a fair price.

The analysts evaluated Azeri oil reserves at about $3 per barrel, while LUKoil's own reserves in western Siberia were valued at around $1 per barrel.

LUKoil said the deal would still need final approval from SOCAR.

The formalities should be completed in the first half of 2003, the company said.

LUKoil added that it was considering selling its minority stakes in other projects.

Inpex, an unlisted government-affiliated oil exploration firm, will set up a company to manage the project and ask state-owned Japan National Oil Corp. to take a 50-percent stake in the firm, the Japanese news reports said.

Japan imports virtually all of its crude oil needs.

The deal would help Japan, currently heavily dependent on Middle East crude oil imports, to diversify its crude oil supply sources.

The ACG field's output is currently 130,000 barrels per day but is expected to reach 1 million bpd by 2007-08.

Inpex, which is 50 percent owned by state-run JNOC, has traditionally been active in Indonesia, but has recently sought to expand beyond Southeast Asia.

Japanese companies are already involved in Kazakhstan and Azerbaijan oil projects.

Inpex is part of a consortium that is developing the Kashagan offshore oil project in Kazakhstan.