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December 17, 2013

Shah Deniz Consortium confirm FID on 2nd stage of project

BP, the leader of the international Shah Deniz consortium, has confirmed the final investment decision (FID) on the second phase development of the Shah Deniz gas field in the Caspian Sea, offshore Azerbaijan.

Shah Deniz

BP, the leader of the international Shah Deniz consortium, has confirmed the final investment decision (FID) on the second phase development of the Shah Deniz gas field in the Caspian Sea, offshore Azerbaijan.

Under the Shah Deniz project, the companies will complete drilling of 26 subsea wells and construction of two bridge-linked platforms, while building new processing and compression facilities onshore at Sangachal.

SOCAR and the Shah Deniz partners will also expand the Shah Deniz production sharing agreement until 2048, under which all the members will undertake exploration and appraisal work on prospects within the PSA area.

The decision is expected to activate plans for the creation of the new Southern Gas Corridor to Europe in addition to gas transmission infrastructure to Bulgaria.

The to Southern Gas Corridor includes expansion of South Caucasus Pipeline through Azerbaijan and Georgia and construct the Trans Anatolian Gas Pipeline (TANAP) across Turkey and the construction of Trans Adriatic Pipeline (TAP) across Greece, Albania and into Italy.

According to the company, the combined cost of the Shah Deniz Stage 2 and South Caucasus Pipeline (SCP) expansion projects is expected to be about $28bn and would produce 16 billion cubic metres per year (bcma) of gas, which will be used to provide energy in Georgia, Turkey, Greece, Bulgaria and Italy.

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SOCAR president Rovnag Abdullayev said this is the project paves the way for Azerbaijan’s future and the region’s future.

Abdullayev said, "Firstly, it enables us to unlock Azerbaijan’s giant gas resources for the benefit of our nation.Secondly, it establishes Azerbaijan as an important energy supplier to Europe, fulfilling a vision we have had for so many years.

"Thirdly, it brings benefits to countries stretching from the Caspian Sea to the heart of Europe through creating a direct transportation link between the Caspian and the European gas markets."

"The decision is expected to activate plans for the creation of the new Southern Gas Corridor to Europe in addition to gas transmission infrastructure to Bulgaria."

BP Group chief executive Bob Dudley said Shah Deniz 2 and the Southern Corridor pipelines will not only change the energy map, but will give customers in Europe direct access to the gas resources of Azerbaijan for the first time.

"The final investment decision today would not have been possible without years of cooperation between many companies and many countries," Dudley said.

The partners in the consortium are BP the operator with 28.8% stake and SOCAR, Statoil, Total, Lukoil, NICO and TPAO having 16.7%, 15.5%, 10%, 10%, 10% and 9% respectively.

The consortium plans to start gas production in late 2018, while sales to Georgia and Turkey along with first deliveries to Europe would start a year later.

Currently, the condensate production from the Shah Deniz field is about 55,000 barrels a day and is expected increase to 120,000 barrels a day.

Additionally, Shah Deniz partners have agreed to the expansion of production through the existing facilities by 1.4bcma with SOCAR that is in progress and expected to be complete by the end of 2014.


Image: Map showing Southern Corridor Gas Link with Europe. Photo: courtesy of BP.

Nri energy

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