Foreign companies show great interest in Shah Deniz-2

Baku, Azerbaijan, March 13
By Emil Ismayilov - Trend:

Foreign companies have shown considerable interest in the project of the second phase of development of Azerbaijan's Shah Deniz gas condensate field and in ensuring the supply of Azerbaijani gas to Europe, a senior representative of the State Oil Company of Azerbaijan (SOCAR) told journalists on March 12.

There is a definite interest in this large Shah Deniz-2 project, but companies should have relevant opportunities to implement it, the senior representative said.
"Relations with us should be very long term," he said.

Long term relations should also be ensured in the sphere of financing, as the time of implementation of the project is long-lasting and the profit from this project will not be immediate, but increase gradually according to SOCAR representative.

In the peak period of implementation of the projects at Shah Deniz-2, the daily volume of investments is expected to reach $30 million. The maximum and peak volumes of the work will fall on the period of 2016-2017.

On December 17, 2013, a final investment decision was made on the second phase of the Azerbaijani Shah Deniz offshore gas and condensate field's development. Gas from the field will go in the first instance to the European marketplace. The gas to be produced within the second phase of the field's development will be exported to Turkey at six billion cubic meters per year and to European markets at 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).

The initial capacity of the TAP pipeline will be 10 billion cubic meters per year with the possibility of expanding to 20 billion cubic meters per year. TAP shareholders are BP (20 percent), SOCAR (20 percent), Statoil (20 percent), Fluxys (16 percent), Total (10 percent), E.ON (nine percent) and Axpo (five percent).

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

Partners for the development of the Shah Deniz field are: SOCAR with the share of 16.7 percent, British 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 percent).

The TANAP project envisages gas transportation from the Shah Deniz field to Europe via Turkey. The pipeline's initial capacity is expected to reach 16 billion cubic meters per year. Around six billion cubic meters will be delivered to Turkey and the rest to Europe. In future, the pipeline's capacity can be expanded to 31 billion cubic meters of gas per year.

Currently the share distribution in the TANAP project is Turkey (20 percent) and Azerbaijan (80 percent). Following the completion of the process to acquire a stake in the TANAP project by British company BP, shares in the project will be distributed as follows: SOCAR (operator) - 68 percent , Botas (Turkish state pipeline company) - 20 percent and BP - 12 percent.

TANAP shareholders plan to lay the pipeline's foundation in the second quarter of 2014 and to commission it in 2018. TANAP project cost is estimated at $10 billion to $11 billion.

Translated by L.Z.

Edited by S.M.

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