BP announces plans on Shah Deniz Stage 2 project

Azerbaijan, Baku, Jan.23 / Trend, S.Aliyev /

A final investment decision on the Shah Deniz Stage 2 project is planned for 2013, BP's Vice President for Shah Deniz Development, Al Cook told journalists on Wednesday.

"And that means BP, SOCAR and our partners have to prepare not just Shah Deniz, we have to prepare the wells, the offshore facilities, we have to prepare the South Caucasus Pipeline Expansion (SCPX), we have to prepare the Trans-Anatolian pipeline system and the European pipeline system. All of this has to be prepared in 2013 to be ready for a final investment decision," he said.

He said there are plenty of challenges in 2013. "And one of the most important milestones is selection between the Trans-Adriatic pipeline and the Nabucco West pipeline to be made in June for our gas sales to Europe," Cook said.

"2013 is a year with many targets and many milestones, but we started the year in very good shape," He said.

Cook mentioned that on December 18, following the meeting between the BP CEO Mr. Bob Dudley and Azerbaijani President Ilham Aliyev, a series of agreements were signed on the Shah Deniz project, South Caucasus pipeline extension and on the development of Trans Anatolian system.

According to Cook, these agreements set out a number of important concepts. They underpinned the commercial terms for Shah Deniz 2 project.

"On the South Caucasus Pipeline Expansion, this changes SCPX from a pipeline that transports Shah Deniz gas into a pipeline that supports all gas from Azerbaijan. This means that SOCAR will be able to control in the future, the expansion of SCP beyond Shah Deniz 2 requirements too and in anticipation of requirements of future gas fields in Azerbaijan," Cook said.

"That means for the first time the SOCAR will have a leadership role in all the pipelines that take gas from Azerbaijan all the way to the Europe. We strongly support that the government of Azerbaijan and SOCAR should have control over its vital gas export infrastructure, they will lead the future development," Cook added.

He said BP also plans to join TANAP as a 12-percent shareholder and support SOCAR in its role as the operator of TANAP.

"SOCAR will be able to control the future capacity of SCP, SOCAR will be able to make decision on how big we want the future of SCP to be, when we want to expand it and BP will support SOCAR in doing that. BP will take the project to 24-25 bcma and SOCAR will be able to decide on when it wants to expand it from 25 bcma up to 30 bcma, 50 bcma and so on," he said.

Agreements made on December 18 are very important. "They covered the commercial terms for Shah Deniz 2. What we have also done in the agreements is we have set up the framework for BP and others to join TANAP and we agreed on commercial terms, but we have not officially entered TANAP, we plan to do that in the next few months," Cook said.

According to Cook, BP believes that TANAP is one of the most strategic pipelines in the world. "At the eastern end of TANAP we have some of the world's greatest gas resources, in Azerbaijan and in the Middle East. At the western end of TANAP we have one of the world's most important gas markets. TANAP is the connection between the two, this is why, we are so pleased as BP in supporting SOCAR in such an important project. In particular we applaud the leadership of Azerbaijan and Turkey in ratifying the TANAP agreements signed last year," he said.

Cook said in August last year BP signed an agreement with TAP to fund their project and for BP, Total and SOCAR to join the project. Last week in Vienna we signed similar agreements with Nabucco West, this time for BP and partners to join the Nabucco West project and fund it.

From BP's perspective this is important because the company now has rights to have equity in all four of big southern pipeline corridors, SCPX, TANAP, Nabucco West and TAP, he said.

"So finally all these agreements put us in a very good place to spend money in 2013-14, to take Shah Deniz to first production in 2018. Over the next 18 months, so in 2013-2014 we will make commitments to spend 10 bln dollars on this project," he said.

"Over 1 billion dollars has been spent on Shah Deniz 2 already. Over one thousand people are now involved in the project, in total. Works on Shah Deniz 2 were launched approximately 5 years ago but we increased the activity in the last 3 years," he said.

According to Cook, Nabucco and TAP will operate their own pipelines. "We do not believe they will be SOCAR operated or BP operated or Statoil operated. They will be operated by their own companies," he said.

The company itself will be the operator, but it will draw on the expertise from member companies he added.

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