Total sold its 10% stake in Azerbaijan’s Shah Deniz gas project to Turkey’s state oil company for $1.5bn as part of an asset-sale plan.
TPAO Turkiye Petrolleri will buy Total’s stake in the field and South Caucasus pipeline, the French company said today in a statement. Total entered the Caspian Sea project in 1996.
After the deal, France’s largest oil company will have sold $16bn of assets since 2012, pushing through its target of raising $15bn to $20bn through divestments, it said.
“The sale of our interest in Shah Deniz is in line with Total’s active portfolio management and the focus of its investment capability on more strategic assets,” Michael Borrell, senior vice-president for continental Europe and central Asia, said in the statement.
The project, run by BP, started output in 2006 and is producing the equivalent of about 200,000 barrels a day. A second phase of the project, which will see natural gas shipped through a pipeline to Europe, was approved last year.
TPAO yesterday raised its holding to 19%. Statoil in December announced a sale of a 10% stake in the project to State Oil Company of Azerbaijan, known as Socar, for $1.45bn, reducing its share to 15.5%. Socar now has 16.67%, while OAO Lukoil and Iran’s NICO each hold 10%.
Turkey seeks to diversify supply away from Russia and Iran as the two neighbours supply almost all of its gas under long- term contracts. The Azeri pipeline and other Caspian projects also offer European Union nations a chance to curb reliance on Russia amid concerns that disputes over Ukraine’s future may affect energy supplies.
Total is operator of the Absheron project, also in the Caspian Sea, with partners GDF Suez and Socar. Total is studying how to develop that “significant gas and condensate discovery,” it said in today’s statement.
Chief executive officer Christophe de Margerie said in February a target for asset sales may be raised to $25bn by an unspecified date while capital spending peaked last year. At the same time, he has embarked on a campaign to cut costs including delaying investment decisions on big projects.
Yesterday, the French oil company announced it would cut jobs and delay investment in the Joslyn oil-sands project in Canada because of escalating costs.
Turkish pipeline firm Botas also signed an agreement at the ceremony with Azeri state oil company Socar to raise its stake in the Trans-Anatolian natural gas pipeline project (TANAP) to 30% from 20%.
Azerbaijan’s biggest gas field, Shah Deniz is being developed by consortium partners BP, Statoil, Socar and others.
Shah Deniz I has been pumping gas since 2006 and has an annual production capacity of about 10bn cubic metres (bcm) of natural gas.
The next phase, Shah Deniz II, is important for Europe as an alternative to gas from Russia’s Gazprom. It is expected to produce 16 bcm of gas per year from around 2019, with 10 bcm earmarked for Europe and 6 bcm for Turkey.