(Adds background on asset sales in ninth paragraph.)
May 30 (Bloomberg) -- Total SA sold its 10 percent stake in Azerbaijan’s Shah Deniz gas project to Turkey’s state oil company for $1.5 billion as part of an asset-sale plan.
TPAO Turkiye Petrolleri AO will buy Total’s stake in the field and South Caucasus pipeline, the French company said today in a statement. Total entered the Caspian Sea project in 1996.
After the deal, France’s largest oil company will have sold $16 billion of assets since 2012, pushing through its target of raising $15 billion to $20 billion through divestments, it said.
“The sale of our interest in Shah Deniz is in line with Total’s active portfolio management and the focus of its investment capability on more strategic assets,” Michael Borrell, senior vice president for continental Europe and central Asia, said in the statement.
The project, run by BP Plc, started output in 2006 and is producing the equivalent of about 200,000 barrels a day. A second phase of the project, which will see natural gas shipped through a pipeline to Europe, was approved last year.
TPAO today raised its holding to 19 percent. Statoil in December announced a sale of a 10 percent stake in the project to State Oil Company of Azerbaijan, known as Socar, for $1.45 billion, reducing its share to 15.5 percent. Socar now has 16.67 percent, while OAO Lukoil and Iran’s NICO each hold 10 percent.
Turkey seeks to diversify supply away from Russia and Iran as the two neighbors supply almost all of its gas under long- term contracts. The Azeri pipeline and other Caspian projects also offer European Union nations a chance to curb reliance on Russia amid concerns that disputes over Ukraine’s future may affect energy supplies.
Total is operator of the Absheron project, also in the Caspian Sea, with partners GDF Suez SA and Socar. Total is studying how to develop that “significant gas and condensate discovery,” it said in today’s statement.
Chief Executive Officer Christophe de Margerie said in February a target for asset sales may be raised to $25 billion by an unspecified date while capital spending peaked last year. At the same time, he has embarked on a campaign to cut costs including delaying investment decisions on big projects.
Yesterday, the French oil company announced it would cut jobs and delay investment in the Joslyn oil-sands project in Canada because of escalating costs.
--With assistance from Ercan Ersoy in Istanbul.