Picture perfect finish for Shah Deniz-2 in 2013

Oil&Gas Materials 13 December 2013 18:02 (UTC +04:00)

Baku, Azerbaijan, Dec. 13

By Aygun Badalova - Trend:

Just a few days left before the consortium of Azerbaijani Shah Deniz field development will make the final investment decision (FID) on the second phase of development of this offshore gas condensate field.

The principal stakeholders are expected to green light the Shah Deniz-2 project on December 17 in Baku. The event is perceived as an important step towards advancing the project as well as the whole Southern Gas Corridor, which at its initial stage envisages the transportation of Azerbaijani gas to the European markets.

The contract to develop the offshore Shah Deniz field was signed on June 4, 1996. Participants to the agreement are: BP as an operator (25.5 percent), Norway's Statoil (25.5 percent), Iran's NICO (10 percent), France's Total (10 percent), Russia's Lukoil (10 percent), Turkey's TPAO (nine percent) and SOCAR, the state oil company of Azerbaijan (10 percent).

Once initialed the Shah Deniz-2 project will move into the execution state.

"Shah Deniz-2 is a huge project with an estimated cost of $25 billion. That cost includes installation of two offshore platforms, connected to each other via a bridge, drilling of more than 20 underwater wells with two semi-submersible drilling rigs, construction of 500 kilometers of underwater pipelines at a depth of 550 meters, extension of the Sangachal terminal and expansion of the South Caucasus Pipeline (SCP).

In comparison, the investments in the first phase of Shah Deniz field development was around four billion dollars.

Within the second phase of the field's development it is planned to produce some 16 billion cubic meters of gas (within the first phase - 9 billion), six billion of which will be transported to Turkey and six billion - to Europe. The first gas supplies toTurkey as part of this project will start in 2018, and to Europe in 2019.

In the framework of a final investment decision on Shah Deniz 2 project 39 documents are expected to be signed, said Rovnag Abdullayev, president of SOCAR (the State Oil Company of Azerbaijan). The event will be attended, in particular, by high level officials from the European countries, including by ones from Italy, Greece and Albania - the countries-participants of the Trans Adriatic Pipeline (TAP), which will transport Azerbaijani gas to Europe.

The year 2013 was really important and decisive for the great project, in which Azerbaijan has a key role as a gas supplier.Azerbaijan's efforts in opening the Southern Gas Corridor and in turning this viable project into reality are sizeable.

Recognizing the role of Azerbaijan in diversification of European supplies, Energy Counsellor of the EU delegation to Azerbaijan Edyta Nowak said: "At present, the EU's attention in the search for new ways to deliver gas is focused on Azerbaijan and in particular the giant Shah Deniz field which lays the foundation for the Southern Gas Corridor." She added that considerable work was conducted on its implementation and important agreements signed.

Among the most important steps towards the implementation of the Southern Gas Corridor taken this year were the selection of TAP as a route to transport Azerbaijani gas to Europe and the signing of Shah Deniz-2 gas purchase agreements with nine European companies.

The authorization of Shah Deniz-2 project will be a perfect close of the decisive year for Azerbaijani gas on its way to the European markets. At the same time it will be just a beginning for the further important steps within the projects in the Southern Gas Corridor chain, which also includes TAP and TANAP (Trans Anatolian gas pipeline) projects.