Southern Gas Corridor СJSC talks on German loan guarantee

Oil&Gas Materials 7 March 2018 14:06 (UTC +04:00)

Baku, Azerbaijan, March 7

By Leman Zeynalova – Trend:

Budget Committee of German Federal Assembly will consider a guarantee for $1.5 billion loan for Azerbaijan’s Southern Gas Corridor CJSC, the company told Trend.

As is known, negotiations with international financial institutions continue for completing the financing of Southern Gas Corridor projects, said the CJSC.

“Interministerial Committee of Germany has recently agreed to provide a guarantee for allocation of up to $1.5 billion loan to finance Azerbaijan’s committment in Shah Deniz 2 and Trans Anatolian Natural Gas Pipeline (TANAP) projects,” said the company.

At the next stage, the issue will be discussed at the Budget Committee of Germany Federal Assembly, after which it is expected to approve the guarantee.

"In this regard, the Southern Gas Corridor CJSC began negotiations with Hermes company, acting on behalf of the Federal Republic of Germany and the relevant banks on the terms of the loan. Depending on the outcome of the negotiations, after making a decision on loan allocation, intra-state procedures will start for signing of the loan and guarantee agreements. The final terms of the loan (amount, term, repayment schedule, etc.) will be determined after achieving full approval, "the company said.

The purpose of providing the guarantee is to financially support the projects which involve German companies.

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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