Shah Deniz 2 consortium green-lights gas field investment

The consortium developing the Shah Deniz gas field on the Azeri shelf of the Caspian Sea signed the final investment decision for the gas field on December 17 2013. Gas from the Shah Deniz 2 development will be shipped to Turkey and the EU.

British Petroleum – one of the companies in the consortium, alongside French firm Total, Norway’s Statoil and Azeri state-owned company Socar – said in a statement that the Shah Deniz developers have also agreed terms to extend their partnership by 13 years, up to 2048.

The signing ceremony on December 17 was attended by Azeri president Ilham Aliev, several heads of government (including Bulgaria’s Plamen Oresharski) and European energy commissioner Guenther Oettinger.

The Shah Deniz development includes drilling and completion of 26 subsea wells and construction of two bridge-linked platforms, BP said. It will produce about 16 billion cubic metres of gas a year, which will be shipped to Turkey (six billion cubic metres) and Europe (10 billion cubic metres).

First deliveries to Turkey have been scheduled for 2018, with deliveries to European customers set to follow a year later. The gas will be shipped to Europe using the yet-to-be-built Trans-Anatolian Pipeline (TANAP) in Turkey and the Trans-Adriatic Pipeline (TAP), which will cross Greece, Albania and the Adriatic Sea before reaching its destination in southern Italy.

Together, TANAP and TAP form the EU’s Southern Gas Corridor, envisioned to reduce the bloc’s reliance on Russian gas deliveries.

“This decision to open the Southern Gas Corridor is a real breakthrough. Through its further enlargement, the corridor will have the potential to meet up to 20 per cent of the EU’s gas needs in the long term,” Oettinger said. The final investment decision is decisive in that all agreements signed by the consortium before were conditional on this investment decision, he said.

In September 2013, the consortium signed 25-year gas contracts with several companies – Shell, Bulgargaz, Spain’s Gas Natural Fenosa, Greece’s DEPA, Germany’s E.ON, Italy’s Hera Trading and Enel, France’s GDF Suez and Switzerland’s AXPO.

Bulgargaz agreed to buy one billion cubic metres of Shah Deniz 2 gas a year, enough to satisfy about a third of domestic demand – currently, Bulgaria imports about 90 per cent of its annual consumption from Russia at a price of $430 for 1000 cubic metres, under the terms of the new long-term deal signed with Gazprom in November 2012. Pricing details of the deal with the Shah Deniz 2 consortium have not been disclosed.

(Photo: Jayesh Nair)



The Sofia Globe staff

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