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Germany to provide loan guarantee for Azerbaijani gas supply to Europe

Oil&Gas Materials 6 March 2018 10:09 (UTC +04:00)
German government intends to provide loan guarantee of $1.5 billion to Azerbaijani state-owned enterprise through a German bank for ensuring gas supply from Azerbaijan.
Germany to provide loan guarantee for Azerbaijani gas supply to Europe

Baku, Azerbaijan, March 6
By Leman Zeynalova – Trend:

German government intends to provide loan guarantee of $1.5 billion to Azerbaijani state-owned enterprise through a German bank for ensuring gas supply from Azerbaijan, DW reported.

The report refers to the letter from the Parliamentary State Secretary at the Ministry of Finance of Germany, Jens Spahn, to the chairman of the budget committee of the Bundestag, Peter Boehringer.

The letter says that the loan will amount to $1.5 billion dollars (1.2 billion euros).

"These gas supplies should make a significant contribution to providing Europe and Germany with gas," said the letter.

Since January 1, 2016, German Uniper had a spin-off with German E.ON company which was one of the nine European companies that signed an agreement with Shah Deniz consortium in September 2013 on purchasing Azerbaijani gas.

The gas trading business is now in the responsibility of Uniper.

The Shah Deniz consortium announced on September 19, 2013 that 25-year sales agreements have been concluded for just over 10 billion cubic meters a year of gas to be produced from the Shah Deniz field in Azerbaijan as a result of the development of Stage 2 of the Shah Deniz project.

The contracts on the purchase of Azerbaijani gas from the second phase of Shah Deniz field development (Shah Deniz-2 project) were signed with Shell, Bulgar gas, Gas Natural Fenosa, EON, Gaz de France, Hera, Enel, Axpo, DEPA.

The Shah Deniz Stage 2 project is set to bring gas directly from Azerbaijan to Europe for the first time, opening up the Southern Gas Corridor.

In total 16 billion cubic meters a year of Shah Deniz Stage 2 gas will be delivered through more than 3500 kilometers of pipelines through Azerbaijan, Georgia, Turkey, Greece, Bulgaria, Albania and under the Adriatic Sea to Italy.

The Southern Gas Corridor, worth over $40 billion, is considered as one of the priority energy projects for the EU, which strives for diversification of gas sources. The project envisages the transportation of gas from the Caspian region to the European countries through Georgia and Turkey.

At an initial stage, the gas to be produced in the Stage 2 of development of Azerbaijan's Shah Deniz field is considered as the main source for the Southern Gas Corridor projects. Other sources can also connect to this project at a later stage.

As part of the Shah Deniz Stage 2, the gas will be exported to Turkey and European markets by expanding the South Caucasus Pipeline and the construction of Trans-Anatolian Natural Gas Pipeline (TANAP) and Trans Adriatic Pipeline (TAP).

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Follow the author on Twitter: @Lyaman_Zeyn

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