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SOCAR can finance its share in second phase of development of Shah Deniz field

Oil&Gas Materials 20 September 2010 18:06 (UTC +04:00)
The State Oil Company of Azerbaijan (SOCAR) can finance its share (10 percent) of the second phase of the development of the Shah Deniz gas field in the Azerbaijani sector of the Caspian Sea if necessary, SOCAR's Vice-President for Economic Affairs, Suleyman Gasimov, said today.

Azerbaijan, Baku, Sept.20 / Trend E. Ismayilov /

The State Oil Company of Azerbaijan (SOCAR) can finance its share (10 percent) of the second phase of the development of the Shah Deniz gas field in the Azerbaijani sector of the Caspian Sea if necessary, SOCAR's Vice-President for Economic Affairs, Suleyman Gasimov, said today.

He said Az Shax-Deniz will be engaged in the process of attracting funds. "But if there are problems, SOCAR, of course, will take it on itself" Gasimov said.

In addition, he noted, a final decision on the gas cost for Turkey from the Shah Deniz field will be made soon, whereupon the funds received from Turkey can go on financing SOCAR's share in the second phase of development of the Shah Deniz field.

According to Gasimov, SOCAR is a supporter of the one-time payment of funds that was formed as a result of changes in the gas cost for Turkey in the first phase of the Shah Deniz field. "Of course, the one-time payment was profitable for us, but it all depends on the budget and capabilities of the Botas [Turkey's state pipeline company]," Gasimov said.

An old contract is in force between Azerbaijan and Turkey until the signing of new one. According to this contract, Azerbaijani gas is supplied to Turkey at $120 per 1,000 cubic meters. As stated in the contract concluded with Turkey, the gas transit price from Shah Deniz can be reviewed after one year.

Earlier, Azerbaijan and Turkey agreed on the cost of gas, both within the first and the second phases of development of the Shah Deniz field, as well as the conditions for the Azerbaijani gas transit via Turkey. The parties signed a common memorandum, but final contracts on these issues have not been yet signed. The signing of these documents is expected by late March 2011.

Under the current contract, Turkey must receive 6.6 billion cubic meters of gas from Shah Deniz in the first stage of the field's development. Shah Deniz reserves are estimated at 1.2 trillion cubic meters.

The contract to develop Shah Deniz was signed on June 4, 1996. Participants to the agreement are: BP (operator) - 25.5 percent; Statoil Hydro - 25.5 percent; NICO - 10 percent; Total - 10 percent; LukAgip - 10 percent; TPAO - 9 percent; and, SOCAR - 10 percent.

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