ONGC buys Hess stake in Azeri field for $1 billion

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Hess Corp agreed to sell its 2.72 per cent stake in the large Azeri, Chirag and Guneshli (ACG) group of oil fields in Azerbaijan as well as its 2.36 per cent stake in an associated pipeline to ONGC for $1 billion.

Hess said that ONGC's foreign investment arm ONGC Videsh will buy the assets in a deal it expects to close in the first quarter of 2013. It is subject to Indian and other regulatory approvals.

Hess said the sale was part of an asset sale program under which it is trimming mature assets, as well as stakes in projects in which it only holds a small working interest. It said it has announce nearly $2 billion in sales this year.

The BP-operated ACG oilfields are in the Caspian Sea around 100 kilometers east of Baku.

ACG accounts for the lion's share of Azeri production and is the main source of crude for a pipeline which runs via Georgia to the Mediterranean port of Ceyhan in Turkey.

In August, the BP-led Azerbaijan International Operating Company (AIOC) reported that output at the oilfields over the first six months of 2012 declined to levels not seen since 2007, producing 16.8 million tonnes or 682,154 barrels per day (bpd) in January-June compared to 19 million tonnes a year earlier.

Local officials attributed the output fall at the project, which has total reserves of over 6.5 billion barrels, to repair work on some drilling platforms and refineries.

The country expects its oil output to rise in 2013 thanks to the start of the next stage in ACG's development.

Rothschild advised ONGC Videsh on the sale.