The Shah Deniz Consortium has approved the decision to start front end engineering and design (Feed) on the $25bn Shah Deniz Stage 2 project, in the South Caspian Sea, off the coast of Azerbaijan.

The Shah Deniz field is being developed by BP, Statoil and Azerbaijani state energy company SOCAR.

During the FEED phase of the project, engineering studies will be refined, further wells will be drilled, commercial agreements will be finalised and key construction contracts will begin.

The development includes two new bridge-linked production platforms to serve 26 subsea wells to be drilled with two semi-submersible rigs; as well as 500km of subsea pipeline, which will be installed in water depths of up to 550m.

Stage 2 also includes an upgrade for the South Caucasus Pipeline and expansion of the Sangachal Terminal and the final route selection will be made next year.

BP said the project is expected to add a further 16 billion cubic meters a year (bcma) of gas production to the nine bcma produced in Shah Deniz Stage 1.

The second stage of the project allows the consortium to meet its target for first gas exports at the end of 2017 from the Caspian Sea to markets in Turkey and Europe, opening up the southern gas corridor.

Total reserves at Shah Deniz 2 are estimated at more than 30 trillion cubic feet.