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Japan’s Itochu and Inpex may also bid for Azeri oil project; ONGC, CNPC also invited to make offer

22 February 2010 21:52 (UTC +04:00)

Baku â€“ APA. CNOOC Ltd and China Petroleum & Chemical Corp (Sinopec) are considering bidding for a Devon Energy Corp stake in an Azerbaijan oil field that may fetch as much as US$3 billion, said two people with knowledge of the matter, APA reports quoting Bloomberg Agency. Japan’s Itochu Corp and Inpex Corp are also among companies that may bid for the 5.6 per cent holding in the Azeri-Chirag-Gunashli oil project, four people said, asking not to be identified because they aren’t authorised to discuss the sale publicly.

Existing partners in the Azeri-Chirag-Gunashli field can exercise a right of first refusal to buy Devon’s stake, two of the people said. The other partners are ExxonMobil Corp, Statoil ASA, Turkiye Petrolleri AO, Chevron Corp, BP plc, Hess Corp and State Oil Co of Azerbaijan. Chevron spokesman Mickey Driver and Patrick McGinn of ExxonMobil declined to comment on whether their companies would exercise preferential rights. Hess spokesman Jay Wilson didn’t immediately respond to a message seeking comment.

Devon’s share of proved reserves at Azeri- Chirag-Gunashli was 64 million barrels of oil as at Jan 31, 2009, up from 58 million barrels a year earlier, said company spokesman Chip Minty. Based on that figure, the Devon stake is worth about US$1.3 billion, said Biju Perincheril, an analyst at Jefferies & Co in New York who rates Devon shares at ’buy’ and owns none. A price of US$3 billion would be US$45 per barrel of proved reserves, ’which seems rich to me’, he said.

The oil field is the largest in the Azerbaijan sector of the Caspian basin, according to BP, the operator and holder of a 34 per cent working interest. In 2009, Devon’s share of Azeri-Chirag-Gunashli’s production was 16,698 barrels of light, sweet crude oil a day, Mr Minty said. Devon won’t comment on speculation about pricing or potential bidders for its assets, Mr Minty said.