Japan's Inpex has completed a transaction to become the sole owner of a holding company that holds a significant stake in Azerbaijan's major offshore oil development.

Transaction Details and Ownership Structure

Inpex signed a share purchase agreement to acquire the remaining 49% stake in Inpex South West Caspian Sea Petroleum (ISWCS) from Japan's Ministry of Economy, Trade & Industry. Prior to this transaction, Inpex already held a 51% interest in ISWCS since April 2003. Following the acquisition, ISWCS is now a wholly owned subsidiary of Inpex. The key asset of ISWCS is a 9.31% participating interest in the Azeri-Chirag-Guneshli (ACG) offshore oilfield, which is Azerbaijan's largest oil development.

Strategic Rationale and Project Significance

Inpex stated that the ACG project is a quality asset that has provided the company with stable profits and cash flow for over two decades. The acquisition is expected to further strengthen Inpex's earnings base. The company aims to maximize the project's value by maintaining production levels in the Caspian Sea contract area and expanding its proved reserves. This move is part of Inpex's drive to help secure energy supplies for Japan.

ACG Production and Other Shareholders

As of February, oil production from ACG's seven platforms was averaging 330,000 barrels per day. The operator of the ACG development is BP, which holds a 30.37% stake. The other shareholders are: the Azerbaijani state company Socar (31.65%), MOL Group of Hungary (9.57%), ExxonMobil (6.79%), Turkish Petroleum (5.73%), and India's ONGC Videsh (2.92%). Prior to the transaction, Japanese trading company Itochu held a 3.65% interest in the ACG development.