Preliminary cost of large gas project in Azerbaijan defined

Oil&Gas Materials 14 September 2012 13:59 (UTC +04:00)

Azerbaijan, Baku, Sept 14 /Trend E.Ismayilov/

Until the end of the month, the State Oil Company of Azerbaijan (SOCAR) will present a report on the feasibility study (FS) of the reconstruction and modernisation of the gas distribution system of Baku and the Absheron peninsula prepared by German E.ON, a source at SOCAR told Trend on Friday.

He added that the feasibility study will be improved taking into account SOCAR's proposals, after which further actions, including the preparation of construction documents will be determined.

There will be a lot of work laying the lines, providing the control system for the gas distribution system, the organisation of security and the prevention of accidents in accordance with the feasibility study," the source said.

It is necessary to lay about 10,000 kilometres of pipeline of varying diameters during the reconstruction and modernisation of the gas distributing system in accordance with the preliminary data. Early estimates suggest investments of $1.5 billion manat. Previously, the project was estimated at about one billion euros.

"The final cost of the project will be defined after the preparation of construction documents," the source said.

He noted that SOCAR or E.ON will be involved in the preparation of this documentation, according to the decision. SOCAR intends to carry out the construction itself on the basis of the techniques and technologies contained in the feasibility study.

"The construction work will be carried out by SOCAR, but under the control of German experts," the source said.

The project envisages that E.ON Ruhrgas will prepare a feasibility study required for minimising gas loss, expansion of the existing gas distribution system given increase of population and sustainable development of industry meeting the increased demand for gas in the future.

Baku and Absheron Peninsula's gas system is the largest in the country and covers about 650,000 subscribers. Some 90 per cent of the existing infrastructure should be updated for its reconstruction and modernisation.

Official exchange rate on Sept 14 is 0.7853 AZN/USD