Hungary to Buy Stake in Azeri Gas Field

Energy Trade

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Hungary has reached an agreement on acquiring a stake in Azerbaijan's Shah Deniz gas field, Minister of Foreign Affairs and Trade Péter Szijjártó said in Baku on Wednesday, according to a report by state news wire MTI.

Szijjártó announced the "historical agreement" at a joint press conference with his Azeri counterpart Jeyhun Bayramov. He said that the field, with an annual production of close to 30 bln cubic meters, was one of the largest in the world, and that part of it was delivered to Europe through the Southern Gas Corridor.

The acquisition of the stake in the field will put the security of Hungary's gas supply "in a new dimension", he added.

Under an earlier agreement, Hungary is getting 50 million cubic meters of Azeri gas this year, he noted. Hungary is also partnering with Azerbaijan, Georgia, and Romania on a project to bring energy from the Caucasus to Europe through a submarine cable, he added.

Szijjártó said Hungarian oil and gas company MOL was the third-biggest stakeholder in the largest offshore oil field in Azerbaijan and the value of its investments in the country had reached USD 2 bln. Last year, MOL's production at the field was over 5 mln barrels, 15% of the group-level total, he added.

MOL and Azerbaijan's state-owned oil company Socar have started talks on an LNG framework agreement, he said.

Energy Affairs Minister Csaba Lantos told MTI by phone from Baku on Wednesday that state-owned energy group MVM had signed an agreement with Azerbaijan's state-owned Southern Gas Corridor to acquire a 5% stake in the Shah Deniz field. The agreement sets production volumes for stakeholders until 2050 and paves the way for production at new fields, too, he added.

The investment, the biggest in MVM's history, will be covered from the company's own resources and will not burden the budget, he said. 

In an announcement posted on the website of the Budapest Stock Exchange later on Wednesday, MVM Group said it had agreed to acquire a 5% stake in the production sharing agreement for the Shah Deniz field and a 4% stake in Azerbaijan Gas Supply Company, the special purpose vehicle for the sale of the gas from the field.

The transaction is expected to close in Q3 2024, after conditions are met.

"The transaction is fully in line with the diversification efforts of the European Union, as well as with the national energy strategy and the growth strategy of MVM Group," MVM said.

Other stakeholders in the Shah Deniz field are BP (29.99%), Lukoil (19.99%), Tpao (19%) and Nico (10%). BP is the field's operator.

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