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Lukoil cuts stake purchase in Azerbaijan's Shah Deniz gas field after BP boost

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Malaysia's 15.5% stake split between BP, Lukoil, Socar

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Russia's Lukoil announced Dec. 10 that its additional stake purchase in Azerbaijan's Shah Deniz gas field will be reduced to 9.99% from 15.5% after BP, the project's largest shareholder, used its preemptive buying rights.

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With the $2.25 billion deal signed Oct. 7, the Russian second-largest producer looked to buy 15.5% interest from Malaysia's Petronas, increasing its stake in Shah Deniz from 10% to 25.5%, second only to the field's operator BP.

"In accordance with the new arrangements, the share acquired by Lukoil is reduced from 15.5% to 9.99% with proportional decrease in the transaction value from $2.25 billion to $1.45 billion," Lukoil said in a release.

Azerbaijan's Socar announced Dec. 10 in a separate release that it acquired 4.35% of Petronas' stake, with the remaining 1.16% going to BP.

This will boost BP's stake in the Caspian offshore project to 29.99%, Lukoil's stake to 19.99%, and Socar's stake to 14.35%.

The deal is expected to come into force by the end of January next year, Lukoil and Socar said.

The other partners in Shah Deniz are Turkey 's TPAO on 19%, National Iranian Oil Company on 10%, and Azeri state holding company SGC on 6.67%.

The field off Azerbaijan 's Caspian Sea coast was discovered in 1999 with original "in place" resources of 1 trillion cu m (38 Tcf) of gas and 2 billion barrels of condensate , making it an important alternative to Russian gas supplies for Europe.

The second stage of the project, launched in 2018, is intended to lift total Shah Deniz output by 16 Bcm/year to 26 Bcm/year, with the field also producing 120,000 b/d of condensate .