The deal for acquisition by Hungarian MVM Group of a stake in Azerbaijan's Shah Deniz field will help to secure a stable and reliable source of natural gas, Károly Mátrai, CEO of MVM Group.
On June 5, 2024, MVM Group entered into a sale and purchase agreement with the Azerbaijani state-owned entity Southern Gas Corridor CJSC for the acquisition of a 5 percent stake in the Production Sharing Agreement for Shah Deniz offshore gas-condensate field in the territory of Azerbaijan and a 4 percent stake in Azerbaijan Gas Supply Company Limited, the exclusive special-purpose vehicle established for the marketing and sale of natural gas produced from Shah Deniz gas-condensate field.
"The transaction is expected to close in the third quarter of 2024 once all necessary approvals and documentation are completed. This deal has become one of the largest acquisitions in MVM’s history and it contributes to make progress in the realization of MVM Group's new strategy where a crucial element is the diversification of gas supplies thus reduction of dependence on a single source," he said.
Mátrai noted that the Seller and the Buyer have agreed not to publish the transaction price.
"Therefore, we cannot disclose a specific amount. However, it is certain that the value of the transaction is not described by only the price agreed by the participating parties. The strategic significance to start a new type of cooperation between the two countries, Azerbaijan and Hungary, via this transaction shall be considered as a meaningful value in our view," he explained.
The CEO believes that this acquisition will significantly enhance MVM’s overall energy portfolio in several ways.
"The first to mention is the fact that Shah Deniz as an exploration asset implements the existing energy transmission and distribution portfolio of MVM, thus the acquisition contributes to a natural hedge in the energy portfolio. On the other hand, the newly announced transaction helps to diversify MVM’s energy supply sources. This helps MVM to secure a stable and reliable source of natural gas, which is crucial for energy security," said Mátrai.
He noted that further expectations are:
- Reducing reliance on a single energy supplier by adding a significant international asset to its
portfolio;
- Strengthening MVM’s position in the regional energy market by being involved in one of the
largest gas fields in the world;
- Gaining long-term benefits from the potential increase in gas production and condensate
yields from the Shah Deniz field.
"Overall, this acquisition will bolster MVM’s energy portfolio, making it more robust, secure, and competitive on the global energy market. However, MVM possess natural gas upstream know-how yet, in case of Shah Deniz MVM acquires a non-operating interest, hence BP is the sole operator of the project. In addition to that MVM Group has significant experience in international natural gas trade and already gained valuable expertise in domestic upstream activities.
At this stage we will focus on closing the transaction to become a part of the Shah Deniz gas and condensate field. However, it is important to mention that the Shah Deniz field is planned to be further extended in the coming years. The Shah Deniz ‘Phase 3’ is going to request further investments on behalf of the investors participating in the project, thus with this recent acquisition
MVM has committed itself to further investments in Azerbaijan," said the CEO.
He went on to add that in MVM’s new strategy the green transition is one of the four major pillars.
"Expanding in renewable energies, growing renewable generation capacities are among the objectives where the company already could make significant progress. At state level, both Azerbaijan and Hungary are part of the cooperation called ‘Green Energy Corridor’. This initiative will offer a suitable platform for international cooperation in renewable energies. We are confident that this cooperation will help to achieve further progress in renewable energy strategies, development, and innovation.
MVM is optimistic about finding new areas of cooperation. We are just at the beginning of a strategically important investment which we regard as a first step. Our approach is a long-term perspective, and we are confident that with time new opportunities will emerge. Yet at this point our highest priority is the proper completion of the newly announced acquisition," he concluded.
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