The Absheron Project: BP’s Production Sharing Agreement in Azerbaijan Harvard Case Solution & Analysis

This case is used in a Darden second year elective in corporate finance, "Corporate Financial Policies." The main relationship is a joint venture (JV) between BP and the State Oil Company of the Azerbaijan Republic (SOCAR). The JV is eligible to recover operating costs and capital costs from the proceeds of sales of the early generation of the job and share profits made from production, called the profit oil (PP), with Azerbaijan after the price recoveries. Pupils are requested to clarify how the value approximations correlate with the risks assumed by the various parties and are provided a comprehensive income model for the endeavor and for BP's equity investment.

This case is proper for students who have examined the principles of discounted cash flow and cost of capital. It is best placed as part of a first-year MBA finance course as the last instance in a module related to cash flow analysis. The case can also be instructed in an MBA elective containing advanced corporate finance topics. It'd be of special interest to students planning for a profession linked to consulting, banking, or energy, as well as relevant for students interested in international business.

The Absheron Project BP's Production Sharing Agreement in Azerbaijan case study solution

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