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New financing source for Shah Deniz 2 under scrutiny

Oil&Gas Materials 3 June 2015 19:54 (UTC +04:00)
Black Sea Trade and Development Bank is considering providing a long-term debt to Lukoil Overseas Shah Deniz Ltd. (LOSD, Borrower, Company) for the Borrower's share in the Stage 2 development of the Shah Deniz, an offshore gas exploration and production project in Azerbaijan.
New financing source for Shah Deniz 2 under scrutiny

Baku, Azerbaijan, June 3
By Azad Hasanli - Trend:

Black Sea Trade and Development Bank is considering providing a long-term debt to Lukoil Overseas Shah Deniz Ltd. (LOSD, Borrower, Company) for the Borrower's share in the Stage 2 development of the Shah Deniz, an offshore gas exploration and production project in Azerbaijan, said the message posted on the bank's website.

The project will include two additional bridge-linked offshore platforms, expansion of the Sangachal terminal and expansion of the South Caucasus Pipeline, a gas export pipeline system from Azerbaijan through Georgia to the Turkish border.

Black Sea Trade and Development Bank was founded in 1997 to support the economic development of the Black Sea countries and to strengthen the regional cooperation.

The founders and shareholders of the bank are Russia, Greece, Turkey, Bulgaria, Ukraine, Romania, Albania, Azerbaijan, Armenia, Georgia and Moldova.

Azerbaijan's share in the bank's share capital is 5 percent.

The contract for development of the Shah Deniz offshore field was signed on June 4, 1996. The field's reserve is estimated at 1.2 trillion cubic meters of gas. The shareholders are: BP, operator (28.8 percent), AzSD (10 percent), SGC Upstream (6.7 percent), Petronas (15.5 percent), Lukoil (10 percent), NICO (10 percent) and TPAO (19 percent).

As part of the implementation of the Shah Deniz project, the annual gas production volume will increase from 9 billion cubic meters (within the first phase) by additional 16 billion cubic meters in the second phase. Two offshore platforms will be installed and over 20 subsea wells will be drilled to produce additional volumes of gas within Shah Deniz-2 project.

As part of the second stage of the field's development, gas will be exported to Turkey and European markets by expanding the South Caucasus gas pipeline and the construction of Trans-Anatolian (TANAP) and Trans-Adriatic (TAP) gas pipelines.

The volume of gas produced at Shah Deniz field stood at 9.9 billion cubic meters in 2014, while the volume of condensate production at this field totaled 2.3 million metric tons (18.7 million barrels), compared to 9.8 billion cubic meters of gas and 2.48 million metric tons of condensate (19.6 million barrels) in 2013.

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Follow the author on Twitter: @AzadHasanli

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