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Clifford Chance advises Statoil on the US$2.25 billion disposal of its Shah Deniz interest to PETRONAS

22 October 2014

Clifford Chance advises Statoil on the US$2.25 billion disposal of its Shah Deniz interest to PETRONAS

Clifford Chance is advising the international energy company Statoil ASA (Statoil) on the disposal of Statoil's interest in the Shah Deniz field, off shore Azerbaijan, to the Malaysian oil and gas company PETRONAS. The transaction value is US$2.25 billion. Closing is expected in early 2015 following approvals from the relevant authorities.

The disposal comprises of a 15.5% participating interest in the Shah Deniz production sharing agreement, a 15.5% share in the South Caucasus Pipeline Company (SCPC), a 15.5% share in the SCPC holding company, and a 12.4% share in the Azerbaijan Gas Supply Company (AGSC).  The transaction follows on from Statoil's farm down on 1 May 2014, of 10% of its (then 25.5%) interest in the Shah Deniz field to BP (3.33%) and SOCAR (6.67%) for US$ 1.45 billion, in relation to which Clifford Chance also advised.

The Shah Deniz field was discovered in 1999. It is located on the deep water shelf of the Caspian Sea, 70 kilometres south-east of Baku, in water depths ranging from 50 to 500 metres. Shah Deniz Stage 1 began operations in 2006. The Shah Deniz partners are currently producing approximately 26 million cubic meters of gas and 53,000 barrels of condensate per day, approximately equivalent to 225,000 barrels of oil equivalent per day. Statoil’s 2014 second quarter production from the Shah Deniz field was 38,000 barrels of oil equivalent per day.

The Shah Deniz field is operated by BP (28.8%) and the other partners are TPAO (19%), SOCAR (16.7%), Lukoil (10%), Nico (10%).

  • Statoil is an international energy company with operations in 36 countries.  Statoil is headquartered in Norway with approximately 22,000 employees worldwide, and are listed on the Oslo and New York stock exchanges.
  • Petroliam Nasional Berhad (PETRONAS) is Malaysia’s fully integrated oil and gas multinational ranked among the largest corporations on FORTUNE Global 500®.  Operating in the Upstream and Downstream sectors, it has presence in more than 65 countries since it was first incorporated in 1974. PETRONAS is among the top five oil and gas companies in terms of production and the most profitable company in Asia.

The Clifford Chance team was led by Steven Fox (M&A Partner and Co-Head of Oil & Gas – London) and Russell Wells (Energy Partner – London) who were assisted by Sze-Shing Tan (M&A Counsel – Singapore), Hon Weng Wong (M&A Senior Associate – London), James Harrison (Energy Associate - London) and Jonathan Dillon (M&A Associate – London).  Other team members involved in the transaction include David Harkness (Tax Partner – London), David McCann (Tax Senior Associate – London), Nigel Howorth (Real Estate Partner – London) and Fiona Rooney (Energy Senior Associate – London).