BAKU (Reuters) - Azerbaijan's parliament is expected to ratify an oilfield development contract with a BP (L:BP)-led consortium before the end of 2017, the head of state oil group SOCAR said on Tuesday.
BP and Azerbaijan agreed last week to extend to 2050 the contract to develop the country's biggest oilfields - Azeri-Chirag-Guneshli (ACG), a deal dubbed "the contract of the century" when first signed in 1994 until 2024.
The new contract secures large investment in Azerbaijan's oil sector over decades and a one-off bonus of $3.6 billion (£2.67 billion) for the government, a welcome boost for a country that has struggled with a sharp drop in oil prices in the past three years.
"The new contract is expected to be submitted to the parliament before the end of 2017, coming into force after ratification," Rovnag Abdullayev, president of state-owned energy company SOCAR, told Reuters.
He said the main goal of the new contract was to spur interest among SOCAR's foreign partners in new long-term investments and to secure sustainable exploration of the oilfields.
"Today our financial and technological resources are much more advanced than back in the 1990s, when the first "contract of the century" was negotiated," Abdullayev said.
"That allows Azerbaijan to act independently, having an effect on the final outcome of all negotiations."
Abdullayev said that according to the new contract Azerbaijan's direct share in profitable oil amounted to 75 percent and the ratio was not subject to any variations from the start until the end of the contract, thus contributing to stability of the national income.
Under the new production sharing agreement, SOCAR will increase its share to 25 percent from 11.65 percent, while BP's stake declines to 30.37 percent from 35.8 percent. BP will remain the operator.
Stakes of other firms in the BP-led consortium have also been reduced. Chevron (N:CVX) now has 9.57 percent, Inpex (T:1605) 9.31 percent, Statoil (OL:STL) 7.27 percent, ExxonMobil (N:XOM) 6.79 percent, TPAO 5.73 percent, Itochu (T:8001) 3.65 percent and ONGC Videsh (BO:ONVI) 2.31 percent.
The ACG fields produce 585,000 barrels per day, accounting for three quarters of the Azerbaijan's oil output, but production is expected to rise as the partners could invest up to $40 billion in the next 32 years.