* BP CEO says new giant ACG deal profitable at $55/bbl oil
* Deal sees BP cede stake to SOCAR, pay bonus fee
* BP on track to start 7 projects in 2017 (Adds details, quotes, INTERVIEW tag)
By Ron Bousso, Dmitry Zhdannikov and Karolin Schaps
LONDON, Sept 14 (Reuters) - A deal by BP to extend oil production-sharing in Azerbaijan by 25 years is profitable at current oil prices even after paying a signing bonus and cutting the firm’s stake in the project, Chief Executive Bob Dudley said in an interview.
The pact between a BP-led consortium and Azerbaijan to continue developing the Azeri-Chirag-Guneshli (ACG) offshore fields until 2050 comes as the oil and gas company prepares to boost production sharply by the end of the decade.
Under the deal, BP and its partners cede part of their stake to Azerbaijan’s national energy company SOCAR and pay the government a $3.6 billion signing bonus. BP’s stake falls to 30.37 percent from 35.8 percent but it will remain the operator.
The initial agreement, signed in 1994, was dubbed by some as “the contract of the century” for its transformative impact on the Azeri economy.
Speaking from Baku, Dudley said the renewed deal is profitable with oil currently around $55 a barrel and that it remains attractive within BP’s portfolio even as crude prices are not expected to rise sharply this decade.
“It is very good, solid economics for everyone involved,” the BP CEO told Reuters on Thursday. “Breakeven is below the current price of oil ... it is competitive in our portfolio, most certainly.”
BP, like its peers, has sharply cut spending over the past three years following a drop in oil prices, slashing costs for projects and laying off thousands of employees.
“You can only imagine at a time when oil prices have dropped like they have in recent years that we are very selective about where we make our investments,” he said.
The London-based company is on track to start production this year at seven major projects around the world, including the giant Eni-operated Zohr gas field in Egypt.
“We will see all seven projects come on through 2017 and lay the foundation towards 800,000 barrels per day of new production by 2020,” Dudley said.
Analysts at investment bank Tudor, Pickering, Holt & Co estimated the new contract would lead to a drop of around 15,000 barrels per day in BP’s 2018 production, which is seen reaching around 3.7 million barrels of oil and gas equivalent per day. (Reporting by Ron Bousso and Dmitry Zhdannikov in London and Karolin Schaps in Amsterdam; Editing by Dale Hudson)