ONGC Videsh Ltd (OVL), the overseas arm of oil & gas major ONGC,  have entered into an agreement to acquire Hess Corporation’s 2.72% participating interest in the Azeri, Chirag and the deep water portion of Guneshli fields in the Azerbaijan sector of the Caspian Sea and 2.36% stake in an associated pipeline for a sum of $1 bln.

The acquisition marks ONGC Videsh’s entry into oil rich Azerbaijan and would add proved reserves equivalent to 9% of its existing portfolio. Subject to relevant government and regulatory approvals, acquisition is expected to close by the first quarter of 2013 (Jan-Mar).

The BP Plc-operated Azeri, Chirag and Guneshli fields, or ACG fields, are located in the south Caspian Sea about 95 km off the coast of Azerbaijan. It is the largest oil and gas field complex in Azerbaijan and also one of the largest producing oil fields in the world, producing an average 700,000 barrels of crude oil per day. Other partners in the block are State Oil Co of Azerbaijan Republic, Chevron, Statoil, ExxonMobil, Inpex, Turkish national oil company TPAO, and Itochu.

The 1,768-km Baku-Tbilisi-Ceyhan pipeline has the capacity to transport around 1.0 mln barrels of oil per day and is one of the main export routes for Caspian crude oil. It evacuates the Caspian Sea crude to the Ceyhan terminal in the Mediterranean Sea in south east Turkey.

This is ONGC Videsh’s second acquisition of stake in a Caspian Sea block in less than a year. In October last year, the company had acquired 25% stake in the highly prospective Satpayev exploration block in Kazakhstan, which is estimated to have 1.85 bln barrels of crude oil reserves.

ONGC Videsh is currently present in 15 countries, including Brazil, Colombia, Cuba, Iran, Iraq, Kazakhstan, Libya, Myanmar, Nigeria, Russia, South Sudan, Sudan, Syria, Venezuela and Vietnam.