Partners in the Shah Deniz gas field consortium in Azerbaijan have decided to go ahead with a stage 2 development of the Caspian Sea field, opening its sources to Europe.
This decision triggers plans to expand the South Caucasus Pipeline (SCPX) through Azerbaijan and Georgia, to construct the Trans Anatolian Gas Pipeline (TANAP) across Turkey and to construct the Trans Adriatic Pipeline (TAP) across Greece, Albania and into Italy.
The total cost of the Shah Deniz stage 2 and SCP Expansion projects will be around US$28 billion.
Bob Dudley, group CEO, BP, said: “Very few projects have the ability to change the energy map of an entire region. Shah Deniz 2 and the Southern Corridor pipelines will not only change the energy map, but will give customers in Europe direct access to the gas resources of Azerbaijan for the first time.”
The Shah Deniz field was discovered in 1999. Azerbaijan has been exporting gas to Georgia and Turkey since 2006, from the stage 1 development.
Under the stage 2 plan, 16 billion cubic metres per year (bcma) of gas produced from the giant Shah Deniz field will be carried 3500km to provide energy for consumers in Georgia, Turkey, Greece, Bulgaria and Italy. First gas is targeted for late 2018, with sales to Georgia and Turkey; first deliveries to Europe will follow approximately a year later.
Condensate production from the Shah Deniz field is expected increase to 120,000 bbl/d, from current levels of about 55,000 bbl/d.
In the shorter term, the Shah Deniz partners have agreed terms with SOCAR for expanding production through the existing facilities by 1.4billion cu m/year. The production increase is already in progress and is expected to be complete by the end of 2014.
The Shah Deniz stage 2 project includes offshore drilling and completion of 26 subsea wells and construction of two bridge-linked platforms. Onshore there will be new processing and compression facilities at Sangachal. 16billion cu m/year of gas produced from the Shah Deniz stage 2 project will be carried some 3500km to provide energy for millions of consumers in Georgia, Turkey, Greece, Bulgaria and Italy. First gas is targeted for late 2018, with sales to Georgia and Turkey. First deliveries to Europe will follow approximately a year later.
SOCAR and the Shah Deniz partners have also agreed terms for extending the Shah Deniz Production Sharing Agreement up to 2048. The Shah Deniz partners have agreed to undertake exploration and appraisal work on prospects within the PSA area.
BP said the decision to go ahead with stage 2 means that gas sales contracts with nine European companies will now come into effect. As a result some 10 bcma of Shah Deniz gas are expected to be delivered for 25 years to customers in Italy, Greece and Bulgaria. In addition, some 6billion cu m/year of Shah Deniz Stage 2 gas will be delivered to consumers in Turkey.
All gas sales and transportation contracts will be managed by the Azerbaijan Gas Supply Company established by Shah Deniz co-ventures under the operatorship of SOCAR.
Statoil also agreed to sell 10% of its 25.5% holdings in Shah Deniz and the South Caucasus Pipeline. The buyers are SOCAR (6.7%) and BP (3.3%). Statoil will receive a total cash consideration of $1.45 billion. Statoil will not participate as an investor in TANAP.
Statoil holds a 20% share in TAP AG, the owner of Trans Adriatic Pipeline (TAP), which is developing the pipeline for gas transport from Turkey to southern Europe.
The Shah Deniz co-venturers are (after acquisitions): BP, operator (28.8%), SOCAR (16.7%), Statoil (15.5%), Total (10%), Lukoil (10%), NICO (10%) and TPAO (9%).
The TANAP partners are expected to be: SOCAR, operator (68 percent), BOTAS (20%) and BP (12%) following the purchase of Tanap interests by BOTAS and BP that are expected to be completed in 2014.
The TAP partners are: SOCAR (20%), BP (20%), Statoil (20%), Fluxys (16%), Total (10%), E.ON (9%) and Axpo (5%).
Subscribe
