Hungarian oil firm MOL is poised to land a stake in Azerbaijan’s biggest oil project through a $1.57bn deal with US major Chevron.

MOL said on November 4 it had struck a deal to buy Chevron’s 9.57% stake in the Azeri-Chirag-Gunashli (ACG) oil project – a cluster of oilfields operated by BP in the Caspian Sea. It will also secure Chevron’s 9.6% share in the Baku-Tbilisi-Ceyhan (BTC) pipeline, used to pump ACG’s oil to the Mediterranean coast where it can be loaded onto tankers for export.

MOL will pay Chevron $1.57bn for the assets, with the sale due to close in the second quarter of 2020 once it is cleared by regulators. It will then be backdated to January 1 this year.

In a statement, MOL CEO Zsolt Hernadi described the deal as a “significant milestone” in the company’s drive to build up its international exploration and production business. MOL will add around 360-380mn barrels per day of oil equivalent to its proven and probable reserves through the purchase, while also netting a 9.57% share of ACG’s output, which reached 584,000 barrels per day last year.

“With these new barrels we are also strengthening our resilient, integrated business model, which will continue to generate robust cash flow to finance the MOL 2030 transformational projects as well as rising dividends to our shareholders,” Hernadi said.

Reports first emerged that MOL was seeking Chevron’s share at ACG last month. Fellow US oil firm ExxonMobil is also looking for a buyer for its 6.8% stake, having hired Bank of America Merrill Lynch to handle the process. The pair first entered Azerbaijan shortly after it declared its independence from the Soviet Union in 1991, but are now looking to shed non-core international assets to focus more on domestic shale oil.

ACG has been in production since 1997 and is now past its prime, with output steadily declining. However, the project still enjoys low production costs, and BP and its partners believe a further 3bn barrels of oil can be recovered from the fields before their depletion. They recently approved a plan to add a seventh platform at the site at a cost of $6bn, and have discussed the development of ACG’s deeper gas reservoirs.