ONGC Videsh, the international arm of ONGC, has signed an addendum to its existing Production Sharing Agreement (PSA) with major players in the oil and gas industry, including the State Oil Company of Azerbaijan (SOCAR), bp, ExxonMobil, MOL, and others. This agreement focuses on the Azeri-Chirag-Gunashli (ACG) field, located in the Caspian Sea, which holds significant natural gas reserves.
The ACG field's PSA originally covered oil production, but this new agreement expands the scope to include natural gas extraction. This agreement is valid until the current PSA ends in 2049, giving the involved parties plenty of time to explore and develop the NAG reservoirs.
Key stakeholders and their stakes
Several major global oil companies are part of the ACG project, and their stakes in the new NAG project remain unchanged. Here is a breakdown of the ownership:
Natural gas discovery and plans
The exploration of natural gas in the ACG field has been introduced previously. Although the initial PSA did not include natural gas, a data well was drilled in 2022, confirming the presence of large gas reserves in 2023. This discovery of around 4 trillion cubic feet of natural gas is a significant resource for the region and ONGC's international portfolio.
The first well in two priority areas is expected to be drilled by 2025, marking the beginning of natural gas production from the ACG field. Expanding its global presence in the natural gas market further strengthens ONGC’s share market investment strategy.
ONGC’s performance in the share market
ONGC Videsh acquired its interest in the ACG project back in 2013, and since then, the company has seen substantial growth. ONGC’s shares have risen by nearly 41% this year, with an impressive 56% gain in the past 12 months. This new agreement will likely enhance the company's position in the share market, making share market investment in ONGC more attractive.
Key takeaways
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