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French Total may quit Azerbaijani Shah Deniz project

Oil&Gas Materials 27 February 2014 17:40 (UTC +04:00)

Baku, Azerbaijan, Feb. 27

By Aygun Badalova -Trend:

French Total may either dilute its stake in Azerbaijani Shah Deniz field development or quit the project altogether, Nefte Compass reported with the reference to a senior official at Azerbaijani State Oil Company (SOCAR).

Industry sources said now would be an opportune time for companies to either exit the project or join "at ground zero" just as it is cranking up to a major investment phase.

At the same time Nefte Compass reported with the reference to Azerbaijani sources that Turkish state pipeline firm Botas is expected to start negotiations soon on making its upstream debut by taking a stake in Shah Deniz field development project.

BP representative met with Turkish Energy Minister Taner Yildiz on Feb. 26 and it was agreed that Botas could join the Shah Deniz project, according to industry sources. Sources also said that BP and its partners in the project would be unlikely to exercise their pre-emption rights if Total wanted to sell its 10-percent stake to the Turkish company.

"Botas has expressed interest in being part of Shah Deniz," the SOCAR official said. It will most likely be looking for a stake of around 10 percent, wary that "the bigger the share, the bigger the investment" call will be for the 28 billion dollars expansion of the field, the official added.

The SOCAR source also added that if Botas was to take an interest, it would be "deducted from the bigger shareholders. The minor shareholders will keep their holdings intact," he said.

The contract to develop the offshore Shah Deniz field was signed on June 4, 1996.

Participants at the development of the Shah Deniz field are SOCAR with a share of 16.7 percent, BP (28.8 percent), Norway's Statoil (15.5 percent), Iran's NICO (10 percent), French Total (10 percent), Russia's Lukoil (10 percent) and Turkish TPAO (nine per cent).

Shah Deniz reserves are estimated at 1.2 trillion cubic meters of gas.

On December 17, 2013 a final investment decision was made on the second phase of the Shah Deniz field's development.

The gas to be produced within the second phase of the field's development will be exported to Turkey (six billion cubic meters per year) and to the European markets (10 billion cubic meters per year) by means of expanding the South Caucasus Pipeline and construction of the Trans-Anatolian Gas Pipeline (TANAP) and the Trans-Adriatic Pipeline (TAP).

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